Correlation Between China Development and Excelliance MOS
Can any of the company-specific risk be diversified away by investing in both China Development and Excelliance MOS 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 Excelliance MOS 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 Excelliance MOS, you can compare the effects of market volatilities on China Development and Excelliance MOS 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 Excelliance MOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and Excelliance MOS.
Diversification Opportunities for China Development and Excelliance MOS
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Excelliance is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and Excelliance MOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelliance MOS 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 Excelliance MOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelliance MOS has no effect on the direction of China Development i.e., China Development and Excelliance MOS go up and down completely randomly.
Pair Corralation between China Development and Excelliance MOS
Assuming the 90 days trading horizon China Development Financial is expected to generate 0.81 times more return on investment than Excelliance MOS. However, China Development Financial is 1.24 times less risky than Excelliance MOS. It trades about 0.05 of its potential returns per unit of risk. Excelliance MOS is currently generating about -0.02 per unit of risk. If you would invest 1,295 in China Development Financial on August 30, 2024 and sell it today you would earn a total of 425.00 from holding China Development Financial or generate 32.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Financial vs. Excelliance MOS
Performance |
| Timeline |
| China Development |
| Excelliance MOS |
China Development and Excelliance MOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and Excelliance MOS
The main advantage of trading using opposite China Development and Excelliance MOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, Excelliance MOS 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 Excelliance MOS will offset losses from the drop in Excelliance MOS'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 |
| Excelliance MOS vs. Sinopower Semiconductor | Excelliance MOS vs. Niko Semiconductor Co | Excelliance MOS vs. Advanced Power Electronics | Excelliance MOS vs. Anpec Electronics |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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