Correlation Between STARLUX Airlines and Chung Hung
Can any of the company-specific risk be diversified away by investing in both STARLUX Airlines and Chung Hung 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 STARLUX Airlines and Chung Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STARLUX Airlines Co and Chung Hung Steel, you can compare the effects of market volatilities on STARLUX Airlines and Chung Hung 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 STARLUX Airlines with a short position of Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of STARLUX Airlines and Chung Hung.
Diversification Opportunities for STARLUX Airlines and Chung Hung
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STARLUX and Chung is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding STARLUX Airlines Co and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung Steel and STARLUX Airlines 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 STARLUX Airlines Co are associated (or correlated) with Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of STARLUX Airlines i.e., STARLUX Airlines and Chung Hung go up and down completely randomly.
Pair Corralation between STARLUX Airlines and Chung Hung
Assuming the 90 days trading horizon STARLUX Airlines Co is expected to under-perform the Chung Hung. But the stock apears to be less risky and, when comparing its historical volatility, STARLUX Airlines Co is 2.02 times less risky than Chung Hung. The stock trades about -0.2 of its potential returns per unit of risk. The Chung Hung Steel is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,055 in Chung Hung Steel on September 1, 2024 and sell it today you would lose (85.00) from holding Chung Hung Steel or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STARLUX Airlines Co vs. Chung Hung Steel
Performance |
| Timeline |
| STARLUX Airlines |
| Chung Hung Steel |
STARLUX Airlines and Chung Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STARLUX Airlines and Chung Hung
The main advantage of trading using opposite STARLUX Airlines and Chung Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STARLUX Airlines position performs unexpectedly, Chung Hung 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 Hung will offset losses from the drop in Chung Hung's long position.| STARLUX Airlines vs. Taiwan Semiconductor Manufacturing | STARLUX Airlines vs. Hon Hai Precision | STARLUX Airlines vs. MediaTek | STARLUX Airlines vs. Chunghwa Telecom Co |
| Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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