Correlation Between Chinese Maritime and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Chinese Maritime and Chung Hwa 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 Chinese Maritime and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chinese Maritime Transport and Chung Hwa Food, you can compare the effects of market volatilities on Chinese Maritime and Chung Hwa 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 Chinese Maritime with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Maritime and Chung Hwa.
Diversification Opportunities for Chinese Maritime and Chung Hwa
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chinese and Chung is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Maritime Transport and Chung Hwa Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Food and Chinese Maritime 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 Chinese Maritime Transport are associated (or correlated) with Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Food has no effect on the direction of Chinese Maritime i.e., Chinese Maritime and Chung Hwa go up and down completely randomly.
Pair Corralation between Chinese Maritime and Chung Hwa
Assuming the 90 days trading horizon Chinese Maritime Transport is expected to generate 3.18 times more return on investment than Chung Hwa. However, Chinese Maritime is 3.18 times more volatile than Chung Hwa Food. It trades about -0.07 of its potential returns per unit of risk. Chung Hwa Food is currently generating about -0.25 per unit of risk. If you would invest 4,030 in Chinese Maritime Transport on October 25, 2024 and sell it today you would lose (70.00) from holding Chinese Maritime Transport or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chinese Maritime Transport vs. Chung Hwa Food
Performance |
| Timeline |
| Chinese Maritime Tra |
| Chung Hwa Food |
Chinese Maritime and Chung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chinese Maritime and Chung Hwa
The main advantage of trading using opposite Chinese Maritime and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Maritime position performs unexpectedly, Chung Hwa 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 Hwa will offset losses from the drop in Chung Hwa's long position.| Chinese Maritime vs. U Ming Marine Transport | Chinese Maritime vs. Sincere Navigation Corp | Chinese Maritime vs. Taiwan Navigation Co | Chinese Maritime vs. Huaku Development Co |
| Chung Hwa vs. Uni President Enterprises Corp | Chung Hwa vs. Tingyi Holding Corp | Chung Hwa vs. Lien Hwa Industrial | Chung Hwa vs. Great Wall Enterprise |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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