Correlation Between Chang Hwa and Evergreen International
Can any of the company-specific risk be diversified away by investing in both Chang Hwa and Evergreen International 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 Evergreen International 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 Evergreen International Storage, you can compare the effects of market volatilities on Chang Hwa and Evergreen International 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 Evergreen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chang Hwa and Evergreen International.
Diversification Opportunities for Chang Hwa and Evergreen International
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chang and Evergreen is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chang Hwa Commercial and Evergreen International Storag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen International 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 Evergreen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen International has no effect on the direction of Chang Hwa i.e., Chang Hwa and Evergreen International go up and down completely randomly.
Pair Corralation between Chang Hwa and Evergreen International
Assuming the 90 days trading horizon Chang Hwa Commercial is expected to generate 0.54 times more return on investment than Evergreen International. However, Chang Hwa Commercial is 1.84 times less risky than Evergreen International. It trades about 0.0 of its potential returns per unit of risk. Evergreen International Storage is currently generating about -0.02 per unit of risk. If you would invest 1,780 in Chang Hwa Commercial on September 1, 2024 and sell it today you would lose (20.00) from holding Chang Hwa Commercial or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chang Hwa Commercial vs. Evergreen International Storag
Performance |
| Timeline |
| Chang Hwa Commercial |
| Evergreen International |
Chang Hwa and Evergreen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chang Hwa and Evergreen International
The main advantage of trading using opposite Chang Hwa and Evergreen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chang Hwa position performs unexpectedly, Evergreen International 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 Evergreen International will offset losses from the drop in Evergreen International's long position.| Chang Hwa vs. Central Reinsurance Corp | Chang Hwa vs. Huaku Development Co | Chang Hwa vs. Fubon Financial Holding |
| Evergreen International vs. BES Engineering Co | Evergreen International vs. Continental Holdings Corp | Evergreen International vs. Kee Tai Properties | Evergreen International vs. Hung Sheng Construction |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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