Correlation Between Ambassador Hotel and CHO Pharma
Can any of the company-specific risk be diversified away by investing in both Ambassador Hotel and CHO Pharma 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 CHO Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambassador Hotel and CHO Pharma, you can compare the effects of market volatilities on Ambassador Hotel and CHO Pharma 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 CHO Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambassador Hotel and CHO Pharma.
Diversification Opportunities for Ambassador Hotel and CHO Pharma
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ambassador and CHO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ambassador Hotel and CHO Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHO Pharma 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 CHO Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHO Pharma has no effect on the direction of Ambassador Hotel i.e., Ambassador Hotel and CHO Pharma go up and down completely randomly.
Pair Corralation between Ambassador Hotel and CHO Pharma
Assuming the 90 days trading horizon Ambassador Hotel is expected to generate 0.76 times more return on investment than CHO Pharma. However, Ambassador Hotel is 1.32 times less risky than CHO Pharma. It trades about 0.07 of its potential returns per unit of risk. CHO Pharma is currently generating about -0.06 per unit of risk. If you would invest 3,185 in Ambassador Hotel on September 12, 2024 and sell it today you would earn a total of 2,595 from holding Ambassador Hotel or generate 81.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ambassador Hotel vs. CHO Pharma
Performance |
| Timeline |
| Ambassador Hotel |
| CHO Pharma |
Ambassador Hotel and CHO Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambassador Hotel and CHO Pharma
The main advantage of trading using opposite Ambassador Hotel and CHO Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambassador Hotel position performs unexpectedly, CHO Pharma 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 CHO Pharma will offset losses from the drop in CHO Pharma's long position.| Ambassador Hotel vs. Feng Tay Enterprises | Ambassador Hotel vs. Ruentex Development Co | Ambassador Hotel vs. WiseChip Semiconductor | Ambassador Hotel vs. Novatek Microelectronics Corp |
| CHO Pharma vs. Taiwan Semiconductor Manufacturing | CHO Pharma vs. Hon Hai Precision | CHO Pharma vs. MediaTek | CHO Pharma vs. Chunghwa Telecom Co |
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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