Correlation Between China Development and President Securities
Can any of the company-specific risk be diversified away by investing in both China Development and President Securities 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 China Development and President Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Development Financial and President Securities Corp, you can compare the effects of market volatilities on China Development and President Securities 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 China Development with a short position of President Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and President Securities.
Diversification Opportunities for China Development and President Securities
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and President is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and President Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Securities Corp and China Development 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 China Development Financial are associated (or correlated) with President Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Securities Corp has no effect on the direction of China Development i.e., China Development and President Securities go up and down completely randomly.
Pair Corralation between China Development and President Securities
Assuming the 90 days trading horizon China Development Financial is expected to generate 1.09 times more return on investment than President Securities. However, China Development is 1.09 times more volatile than President Securities Corp. It trades about 0.14 of its potential returns per unit of risk. President Securities Corp is currently generating about 0.09 per unit of risk. If you would invest 1,665 in China Development Financial on August 30, 2024 and sell it today you would earn a total of 55.00 from holding China Development Financial or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Financial vs. President Securities Corp
Performance |
| Timeline |
| China Development |
| President Securities Corp |
China Development and President Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and President Securities
The main advantage of trading using opposite China Development and President Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, President Securities 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 President Securities will offset losses from the drop in President Securities' long position.| China Development vs. Cathay Financial Holding | China Development vs. Mega Financial Holding | China Development vs. CTBC Financial Holding | China Development vs. Fubon Financial Holding |
| President Securities vs. Taiwan Secom Co | President Securities vs. TTET Union Corp | President Securities vs. China Steel Chemical | President Securities vs. Taiwan Shin Kong |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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