Correlation Between China Development and CoAsia Microelectronics
Can any of the company-specific risk be diversified away by investing in both China Development and CoAsia Microelectronics 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 CoAsia Microelectronics 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 CoAsia Microelectronics, you can compare the effects of market volatilities on China Development and CoAsia Microelectronics 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 CoAsia Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and CoAsia Microelectronics.
Diversification Opportunities for China Development and CoAsia Microelectronics
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and CoAsia is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and CoAsia Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoAsia Microelectronics 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 CoAsia Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoAsia Microelectronics has no effect on the direction of China Development i.e., China Development and CoAsia Microelectronics go up and down completely randomly.
Pair Corralation between China Development and CoAsia Microelectronics
Assuming the 90 days trading horizon China Development Financial is expected to generate 0.28 times more return on investment than CoAsia Microelectronics. However, China Development Financial is 3.55 times less risky than CoAsia Microelectronics. It trades about 0.12 of its potential returns per unit of risk. CoAsia Microelectronics is currently generating about 0.0 per unit of risk. If you would invest 1,675 in China Development Financial on August 31, 2024 and sell it today you would earn a total of 45.00 from holding China Development Financial or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Development Financial vs. CoAsia Microelectronics
Performance |
| Timeline |
| China Development |
| CoAsia Microelectronics |
China Development and CoAsia Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and CoAsia Microelectronics
The main advantage of trading using opposite China Development and CoAsia Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, CoAsia Microelectronics 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 CoAsia Microelectronics will offset losses from the drop in CoAsia Microelectronics' 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 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |