Correlation Between Newretail and Cheng Fwa
Can any of the company-specific risk be diversified away by investing in both Newretail and Cheng Fwa 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 Newretail and Cheng Fwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Cheng Fwa Industrial, you can compare the effects of market volatilities on Newretail and Cheng Fwa 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 Newretail with a short position of Cheng Fwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Cheng Fwa.
Diversification Opportunities for Newretail and Cheng Fwa
Very weak diversification
The 3 months correlation between Newretail and Cheng is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Cheng Fwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Fwa Industrial and Newretail 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 Newretail Co are associated (or correlated) with Cheng Fwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Fwa Industrial has no effect on the direction of Newretail i.e., Newretail and Cheng Fwa go up and down completely randomly.
Pair Corralation between Newretail and Cheng Fwa
Assuming the 90 days trading horizon Newretail is expected to generate 1.73 times less return on investment than Cheng Fwa. In addition to that, Newretail is 1.25 times more volatile than Cheng Fwa Industrial. It trades about 0.03 of its total potential returns per unit of risk. Cheng Fwa Industrial is currently generating about 0.07 per unit of volatility. If you would invest 1,407 in Cheng Fwa Industrial on September 3, 2024 and sell it today you would earn a total of 1,873 from holding Cheng Fwa Industrial or generate 133.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newretail Co vs. Cheng Fwa Industrial
Performance |
| Timeline |
| Newretail |
| Cheng Fwa Industrial |
Newretail and Cheng Fwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and Cheng Fwa
The main advantage of trading using opposite Newretail and Cheng Fwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail position performs unexpectedly, Cheng Fwa 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 Cheng Fwa will offset losses from the drop in Cheng Fwa's long position.| Newretail vs. President Chain Store | Newretail vs. Uni President Enterprises Corp | Newretail vs. Taiwan FamilyMart Co | Newretail vs. Eclat Textile Co |
| Cheng Fwa vs. Nankang Rubber Tire | Cheng Fwa vs. Newretail Co | Cheng Fwa vs. Cheng Mei Materials | Cheng Fwa vs. Tradetool Auto Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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