Correlation Between Chang Hwa and Falcon Power
Can any of the company-specific risk be diversified away by investing in both Chang Hwa and Falcon Power 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 Chang Hwa and Falcon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chang Hwa Commercial and Falcon Power Co, you can compare the effects of market volatilities on Chang Hwa and Falcon Power 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 Chang Hwa with a short position of Falcon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chang Hwa and Falcon Power.
Diversification Opportunities for Chang Hwa and Falcon Power
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chang and Falcon is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Chang Hwa Commercial and Falcon Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Power and Chang Hwa 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 Chang Hwa Commercial are associated (or correlated) with Falcon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Power has no effect on the direction of Chang Hwa i.e., Chang Hwa and Falcon Power go up and down completely randomly.
Pair Corralation between Chang Hwa and Falcon Power
Assuming the 90 days trading horizon Chang Hwa Commercial is expected to under-perform the Falcon Power. But the stock apears to be less risky and, when comparing its historical volatility, Chang Hwa Commercial is 3.22 times less risky than Falcon Power. The stock trades about -0.11 of its potential returns per unit of risk. The Falcon Power Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,675 in Falcon Power Co on November 27, 2024 and sell it today you would earn a total of 65.00 from holding Falcon Power Co or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chang Hwa Commercial vs. Falcon Power Co
Performance |
| Timeline |
| Chang Hwa Commercial |
| Falcon Power |
Chang Hwa and Falcon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chang Hwa and Falcon Power
The main advantage of trading using opposite Chang Hwa and Falcon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chang Hwa position performs unexpectedly, Falcon Power 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 Falcon Power will offset losses from the drop in Falcon Power's long position.| Chang Hwa vs. Hua Nan Financial | Chang Hwa vs. First Financial Holding | Chang Hwa vs. Sinopac Financial Holdings | Chang Hwa vs. Taishin Financial Holding |
| Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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