Correlation Between Simple Mart and Chain Chon
Can any of the company-specific risk be diversified away by investing in both Simple Mart and Chain Chon 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 Simple Mart and Chain Chon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simple Mart Retail and Chain Chon Industrial, you can compare the effects of market volatilities on Simple Mart and Chain Chon 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 Simple Mart with a short position of Chain Chon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Chain Chon.
Diversification Opportunities for Simple Mart and Chain Chon
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Simple and Chain is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Chain Chon Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chain Chon Industrial and Simple Mart 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 Simple Mart Retail are associated (or correlated) with Chain Chon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chain Chon Industrial has no effect on the direction of Simple Mart i.e., Simple Mart and Chain Chon go up and down completely randomly.
Pair Corralation between Simple Mart and Chain Chon
Assuming the 90 days trading horizon Simple Mart Retail is expected to generate 0.72 times more return on investment than Chain Chon. However, Simple Mart Retail is 1.39 times less risky than Chain Chon. It trades about 0.02 of its potential returns per unit of risk. Chain Chon Industrial is currently generating about 0.01 per unit of risk. If you would invest 4,004 in Simple Mart Retail on September 2, 2024 and sell it today you would earn a total of 201.00 from holding Simple Mart Retail or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. Chain Chon Industrial
Performance |
| Timeline |
| Simple Mart Retail |
| Chain Chon Industrial |
Simple Mart and Chain Chon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and Chain Chon
The main advantage of trading using opposite Simple Mart and Chain Chon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, Chain Chon 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 Chain Chon will offset losses from the drop in Chain Chon's long position.| Simple Mart vs. Taiwan Semiconductor Manufacturing | Simple Mart vs. Hon Hai Precision | Simple Mart vs. MediaTek | Simple Mart vs. Chunghwa Telecom Co |
| Chain Chon vs. Trade Van Information Services | Chain Chon vs. C Media Electronics | Chain Chon vs. Mitake Information | Chain Chon vs. Pili International Multimedia |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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