Correlation Between First Insurance and Chaheng Precision
Can any of the company-specific risk be diversified away by investing in both First Insurance and Chaheng Precision 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 First Insurance and Chaheng Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Insurance Co and Chaheng Precision Co, you can compare the effects of market volatilities on First Insurance and Chaheng Precision 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 First Insurance with a short position of Chaheng Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Chaheng Precision.
Diversification Opportunities for First Insurance and Chaheng Precision
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Chaheng is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Chaheng Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaheng Precision and First 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 First Insurance Co are associated (or correlated) with Chaheng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaheng Precision has no effect on the direction of First Insurance i.e., First Insurance and Chaheng Precision go up and down completely randomly.
Pair Corralation between First Insurance and Chaheng Precision
Assuming the 90 days trading horizon First Insurance Co is expected to under-perform the Chaheng Precision. But the stock apears to be less risky and, when comparing its historical volatility, First Insurance Co is 1.96 times less risky than Chaheng Precision. The stock trades about -0.15 of its potential returns per unit of risk. The Chaheng Precision Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,090 in Chaheng Precision Co on October 16, 2024 and sell it today you would earn a total of 110.00 from holding Chaheng Precision Co or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Chaheng Precision Co
Performance |
| Timeline |
| First Insurance |
| Chaheng Precision |
First Insurance and Chaheng Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Chaheng Precision
The main advantage of trading using opposite First Insurance and Chaheng Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Chaheng Precision 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 Chaheng Precision will offset losses from the drop in Chaheng Precision's long position.| First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
| Chaheng Precision vs. Fulin Plastic Industry | Chaheng Precision vs. FineMat Applied Materials | Chaheng Precision vs. Yonyu Plastics Co | Chaheng Precision vs. Solar Applied Materials |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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