Correlation Between Union Bank and Chung Fu
Can any of the company-specific risk be diversified away by investing in both Union Bank 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 Bank 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 Bank of and Chung Fu Tex International, you can compare the effects of market volatilities on Union Bank 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 Bank with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Chung Fu.
Diversification Opportunities for Union Bank and Chung Fu
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Union and Chung is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of 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 Bank 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 Bank of 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 Bank i.e., Union Bank and Chung Fu go up and down completely randomly.
Pair Corralation between Union Bank and Chung Fu
Assuming the 90 days trading horizon Union Bank of is expected to under-perform the Chung Fu. But the stock apears to be less risky and, when comparing its historical volatility, Union Bank of is 3.03 times less risky than Chung Fu. The stock trades about -0.01 of its potential returns per unit of risk. The Chung Fu Tex International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,630 in Chung Fu Tex International on September 12, 2024 and sell it today you would earn a total of 1,470 from holding Chung Fu Tex International or generate 55.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Bank of vs. Chung Fu Tex International
Performance |
| Timeline |
| Union Bank |
| Chung Fu Tex |
Union Bank and Chung Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bank and Chung Fu
The main advantage of trading using opposite Union Bank and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank 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 Bank vs. Central Reinsurance Corp | Union Bank vs. Huaku Development Co | Union Bank vs. Fubon Financial Holding | Union Bank 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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