Correlation Between Union Insurance and Chung Fu
Can any of the company-specific risk be diversified away by investing in both Union Insurance 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 Union Insurance and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Insurance Co and Chung Fu Tex International, you can compare the effects of market volatilities on Union Insurance 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 Union Insurance with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Insurance and Chung Fu.
Diversification Opportunities for Union Insurance and Chung Fu
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and Chung is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Union Insurance Co 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 Union Insurance 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 Union Insurance Co 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 Union Insurance i.e., Union Insurance and Chung Fu go up and down completely randomly.
Pair Corralation between Union Insurance and Chung Fu
Assuming the 90 days trading horizon Union Insurance Co is expected to generate 0.39 times more return on investment than Chung Fu. However, Union Insurance Co is 2.58 times less risky than Chung Fu. It trades about 0.0 of its potential returns per unit of risk. Chung Fu Tex International is currently generating about -0.14 per unit of risk. If you would invest 3,190 in Union Insurance Co on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Union Insurance Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Union Insurance Co vs. Chung Fu Tex International
Performance |
| Timeline |
| Union Insurance |
| Chung Fu Tex |
Union Insurance and Chung Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Insurance and Chung Fu
The main advantage of trading using opposite Union Insurance and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Insurance 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.| Union Insurance vs. Central Reinsurance Corp | Union Insurance vs. Huaku Development Co | Union Insurance vs. Fubon Financial Holding | Union Insurance vs. Chailease Holding Co |
| Chung Fu vs. Tehmag Foods | Chung Fu vs. China Steel Corp | Chung Fu vs. ECOVE Environment Corp | Chung Fu vs. Taiwan Steel Union |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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