Correlation Between Hua Nan and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both Hua Nan and CHINA DEVELOPMENT 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 Hua Nan and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Nan Financial and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Hua Nan and CHINA DEVELOPMENT 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 Hua Nan with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Nan and CHINA DEVELOPMENT.
Diversification Opportunities for Hua Nan and CHINA DEVELOPMENT
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hua and CHINA is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hua Nan Financial and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and Hua Nan 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 Hua Nan Financial are associated (or correlated) with CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of Hua Nan i.e., Hua Nan and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between Hua Nan and CHINA DEVELOPMENT
Assuming the 90 days trading horizon Hua Nan is expected to generate 1.38 times less return on investment than CHINA DEVELOPMENT. In addition to that, Hua Nan is 2.91 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about 0.04 of its total potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about 0.16 per unit of volatility. If you would invest 714.00 in CHINA DEVELOPMENT FINANCIAL on September 1, 2024 and sell it today you would earn a total of 64.00 from holding CHINA DEVELOPMENT FINANCIAL or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Nan Financial vs. CHINA DEVELOPMENT FINANCIAL
Performance |
| Timeline |
| Hua Nan Financial |
| CHINA DEVELOPMENT |
Hua Nan and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Nan and CHINA DEVELOPMENT
The main advantage of trading using opposite Hua Nan and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Nan position performs unexpectedly, CHINA DEVELOPMENT 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 CHINA DEVELOPMENT will offset losses from the drop in CHINA DEVELOPMENT's long position.| Hua Nan vs. First Financial Holding | Hua Nan vs. Mega Financial Holding | Hua Nan vs. CTBC Financial Holding | Hua Nan vs. ESUN Financial Holding |
| CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Mid Cap | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Electronics | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Top |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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