Correlation Between U Tech and Chi Sheng
Can any of the company-specific risk be diversified away by investing in both U Tech and Chi Sheng 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 U Tech and Chi Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Tech Media Corp and Chi Sheng Chemical, you can compare the effects of market volatilities on U Tech and Chi Sheng 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 U Tech with a short position of Chi Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Tech and Chi Sheng.
Diversification Opportunities for U Tech and Chi Sheng
Good diversification
The 3 months correlation between 3050 and Chi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding U Tech Media Corp and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical and U Tech 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 U Tech Media Corp are associated (or correlated) with Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of U Tech i.e., U Tech and Chi Sheng go up and down completely randomly.
Pair Corralation between U Tech and Chi Sheng
Assuming the 90 days trading horizon U Tech Media Corp is expected to under-perform the Chi Sheng. In addition to that, U Tech is 2.69 times more volatile than Chi Sheng Chemical. It trades about -0.02 of its total potential returns per unit of risk. Chi Sheng Chemical is currently generating about -0.03 per unit of volatility. If you would invest 2,910 in Chi Sheng Chemical on September 3, 2024 and sell it today you would lose (135.00) from holding Chi Sheng Chemical or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Tech Media Corp vs. Chi Sheng Chemical
Performance |
| Timeline |
| U Tech Media |
| Chi Sheng Chemical |
U Tech and Chi Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Tech and Chi Sheng
The main advantage of trading using opposite U Tech and Chi Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Tech position performs unexpectedly, Chi Sheng 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 Chi Sheng will offset losses from the drop in Chi Sheng's long position.| U Tech vs. Taiwan Semiconductor Manufacturing | U Tech vs. Yang Ming Marine | U Tech vs. ASE Industrial Holding | U Tech vs. AU Optronics |
| Chi Sheng vs. SciVision Biotech | Chi Sheng vs. WiseChip Semiconductor | Chi Sheng vs. Novatek Microelectronics Corp | Chi Sheng vs. Leader 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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