Correlation Between China Development and Foxsemicon Integrated
Can any of the company-specific risk be diversified away by investing in both China Development and Foxsemicon Integrated 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 Foxsemicon Integrated 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 Foxsemicon Integrated Technology, you can compare the effects of market volatilities on China Development and Foxsemicon Integrated 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 Foxsemicon Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and Foxsemicon Integrated.
Diversification Opportunities for China Development and Foxsemicon Integrated
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Foxsemicon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and Foxsemicon Integrated Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxsemicon Integrated 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 Foxsemicon Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxsemicon Integrated has no effect on the direction of China Development i.e., China Development and Foxsemicon Integrated go up and down completely randomly.
Pair Corralation between China Development and Foxsemicon Integrated
Assuming the 90 days trading horizon China Development Financial is expected to generate 0.57 times more return on investment than Foxsemicon Integrated. However, China Development Financial is 1.75 times less risky than Foxsemicon Integrated. It trades about 0.14 of its potential returns per unit of risk. Foxsemicon Integrated Technology is currently generating about -0.22 per unit of risk. If you would invest 1,690 in China Development Financial on August 29, 2024 and sell it today you would earn a total of 55.00 from holding China Development Financial or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Financial vs. Foxsemicon Integrated Technolo
Performance |
| Timeline |
| China Development |
| Foxsemicon Integrated |
China Development and Foxsemicon Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and Foxsemicon Integrated
The main advantage of trading using opposite China Development and Foxsemicon Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, Foxsemicon Integrated 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 Foxsemicon Integrated will offset losses from the drop in Foxsemicon Integrated's 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 |
| Foxsemicon Integrated vs. Global Unichip Corp | Foxsemicon Integrated vs. Asmedia Technology | Foxsemicon Integrated vs. Unimicron Technology Corp | Foxsemicon Integrated vs. Novatek Microelectronics Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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