Correlation Between ESUN Financial and Chenming Mold
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Chenming Mold 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 ESUN Financial and Chenming Mold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESUN Financial Holding and Chenming Mold Industrial, you can compare the effects of market volatilities on ESUN Financial and Chenming Mold 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 ESUN Financial with a short position of Chenming Mold. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and Chenming Mold.
Diversification Opportunities for ESUN Financial and Chenming Mold
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESUN and Chenming is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Chenming Mold Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chenming Mold Industrial and ESUN Financial 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 ESUN Financial Holding are associated (or correlated) with Chenming Mold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chenming Mold Industrial has no effect on the direction of ESUN Financial i.e., ESUN Financial and Chenming Mold go up and down completely randomly.
Pair Corralation between ESUN Financial and Chenming Mold
Assuming the 90 days trading horizon ESUN Financial is expected to generate 35.41 times less return on investment than Chenming Mold. But when comparing it to its historical volatility, ESUN Financial Holding is 4.2 times less risky than Chenming Mold. It trades about 0.02 of its potential returns per unit of risk. Chenming Mold Industrial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,825 in Chenming Mold Industrial on September 2, 2024 and sell it today you would earn a total of 11,775 from holding Chenming Mold Industrial or generate 416.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. Chenming Mold Industrial
Performance |
| Timeline |
| ESUN Financial Holding |
| Chenming Mold Industrial |
ESUN Financial and Chenming Mold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and Chenming Mold
The main advantage of trading using opposite ESUN Financial and Chenming Mold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, Chenming Mold 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 Chenming Mold will offset losses from the drop in Chenming Mold's long position.| ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. CTBC Financial Holding | ESUN Financial vs. First Financial Holding | ESUN Financial vs. Fubon Financial Holding |
| Chenming Mold vs. Clevo Co | Chenming Mold vs. Zinwell | Chenming Mold vs. Min Aik Technology | Chenming Mold vs. Promise Technology |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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