Correlation Between Kee Tai and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Kee Tai and Chung Hsin at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kee Tai and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kee Tai Properties and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Kee Tai and Chung Hsin and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kee Tai with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kee Tai and Chung Hsin.
Diversification Opportunities for Kee Tai and Chung Hsin
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kee and Chung is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kee Tai Properties and Chung Hsin Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hsin Electric and Kee Tai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kee Tai Properties are associated (or correlated) with Chung Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hsin Electric has no effect on the direction of Kee Tai i.e., Kee Tai and Chung Hsin go up and down completely randomly.
Pair Corralation between Kee Tai and Chung Hsin
Assuming the 90 days trading horizon Kee Tai is expected to generate 8.98 times less return on investment than Chung Hsin. But when comparing it to its historical volatility, Kee Tai Properties is 1.38 times less risky than Chung Hsin. It trades about 0.01 of its potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,650 in Chung Hsin Electric Machinery on September 2, 2024 and sell it today you would earn a total of 3,150 from holding Chung Hsin Electric Machinery or generate 24.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kee Tai Properties vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| Kee Tai Properties |
| Chung Hsin Electric |
Kee Tai and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kee Tai and Chung Hsin
The main advantage of trading using opposite Kee Tai and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kee Tai position performs unexpectedly, Chung Hsin can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chung Hsin will offset losses from the drop in Chung Hsin's long position.| Kee Tai vs. Ruentex Development Co | Kee Tai vs. CTCI Corp | Kee Tai vs. Information Technology Total | Kee Tai vs. Ennoconn Corp |
| Chung Hsin vs. BES Engineering Co | Chung Hsin vs. Continental Holdings Corp | Chung Hsin vs. Kee Tai Properties | Chung Hsin vs. Hung Sheng Construction |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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