Correlation Between Ambassador Hotel and Chung Fu
Can any of the company-specific risk be diversified away by investing in both Ambassador Hotel and Chung Fu 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 Ambassador Hotel and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambassador Hotel and Chung Fu Tex International, you can compare the effects of market volatilities on Ambassador Hotel and Chung Fu 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 Ambassador Hotel with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambassador Hotel and Chung Fu.
Diversification Opportunities for Ambassador Hotel and Chung Fu
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ambassador and Chung is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ambassador Hotel and Chung Fu Tex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Fu Tex and Ambassador Hotel 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 Ambassador Hotel are associated (or correlated) with Chung Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Fu Tex has no effect on the direction of Ambassador Hotel i.e., Ambassador Hotel and Chung Fu go up and down completely randomly.
Pair Corralation between Ambassador Hotel and Chung Fu
Assuming the 90 days trading horizon Ambassador Hotel is expected to generate 0.66 times more return on investment than Chung Fu. However, Ambassador Hotel is 1.51 times less risky than Chung Fu. It trades about 0.07 of its potential returns per unit of risk. Chung Fu Tex International is currently generating about 0.01 per unit of risk. If you would invest 3,150 in Ambassador Hotel on August 26, 2024 and sell it today you would earn a total of 2,480 from holding Ambassador Hotel or generate 78.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Ambassador Hotel vs. Chung Fu Tex International
Performance |
| Timeline |
| Ambassador Hotel |
| Chung Fu Tex |
Ambassador Hotel and Chung Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambassador Hotel and Chung Fu
The main advantage of trading using opposite Ambassador Hotel and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambassador Hotel position performs unexpectedly, Chung Fu 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 Fu will offset losses from the drop in Chung Fu's long position.| Ambassador Hotel vs. Formosa International Hotels | Ambassador Hotel vs. Far Eastern Department | Ambassador Hotel vs. Leofoo Development Co | Ambassador Hotel vs. U Ming Marine Transport |
| Chung Fu vs. Chunghwa Telecom Co | Chung Fu vs. Tai Tung Communication | Chung Fu vs. Sunspring Metal Corp | Chung Fu vs. Ambassador Hotel |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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