Correlation Between Huaku Development and Chong Hong
Can any of the company-specific risk be diversified away by investing in both Huaku Development and Chong Hong 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 Huaku Development and Chong Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huaku Development Co and Chong Hong Construction, you can compare the effects of market volatilities on Huaku Development and Chong Hong 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 Huaku Development with a short position of Chong Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and Chong Hong.
Diversification Opportunities for Huaku Development and Chong Hong
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Huaku and Chong is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and Chong Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chong Hong Construction and Huaku Development 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 Huaku Development Co are associated (or correlated) with Chong Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chong Hong Construction has no effect on the direction of Huaku Development i.e., Huaku Development and Chong Hong go up and down completely randomly.
Pair Corralation between Huaku Development and Chong Hong
Assuming the 90 days trading horizon Huaku Development Co is expected to generate 0.97 times more return on investment than Chong Hong. However, Huaku Development Co is 1.03 times less risky than Chong Hong. It trades about 0.03 of its potential returns per unit of risk. Chong Hong Construction is currently generating about 0.01 per unit of risk. If you would invest 11,750 in Huaku Development Co on August 30, 2024 and sell it today you would earn a total of 100.00 from holding Huaku Development Co or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaku Development Co vs. Chong Hong Construction
Performance |
| Timeline |
| Huaku Development |
| Chong Hong Construction |
Huaku Development and Chong Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and Chong Hong
The main advantage of trading using opposite Huaku Development and Chong Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, Chong Hong 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 Chong Hong will offset losses from the drop in Chong Hong's long position.| Huaku Development vs. Chong Hong Construction | Huaku Development vs. Highwealth Construction Corp | Huaku Development vs. Fubon Financial Holding | Huaku Development vs. CTBC Financial Holding |
| Chong Hong vs. Tainan Spinning Co | Chong Hong vs. Carnival Industrial Corp | Chong Hong vs. Symtek Automation Asia | Chong Hong vs. CTCI Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |