Correlation Between Champion Microelectronic and Holy Stone
Can any of the company-specific risk be diversified away by investing in both Champion Microelectronic and Holy Stone 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 Champion Microelectronic and Holy Stone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Microelectronic Corp and Holy Stone Enterprise, you can compare the effects of market volatilities on Champion Microelectronic and Holy Stone 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 Champion Microelectronic with a short position of Holy Stone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Microelectronic and Holy Stone.
Diversification Opportunities for Champion Microelectronic and Holy Stone
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Champion and Holy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Champion Microelectronic Corp and Holy Stone Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holy Stone Enterprise and Champion Microelectronic 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 Champion Microelectronic Corp are associated (or correlated) with Holy Stone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holy Stone Enterprise has no effect on the direction of Champion Microelectronic i.e., Champion Microelectronic and Holy Stone go up and down completely randomly.
Pair Corralation between Champion Microelectronic and Holy Stone
Assuming the 90 days trading horizon Champion Microelectronic Corp is expected to under-perform the Holy Stone. In addition to that, Champion Microelectronic is 5.14 times more volatile than Holy Stone Enterprise. It trades about -0.08 of its total potential returns per unit of risk. Holy Stone Enterprise is currently generating about -0.1 per unit of volatility. If you would invest 9,030 in Holy Stone Enterprise on October 24, 2024 and sell it today you would lose (380.00) from holding Holy Stone Enterprise or give up 4.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Champion Microelectronic Corp vs. Holy Stone Enterprise
Performance |
| Timeline |
| Champion Microelectronic |
| Holy Stone Enterprise |
Champion Microelectronic and Holy Stone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Microelectronic and Holy Stone
The main advantage of trading using opposite Champion Microelectronic and Holy Stone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Microelectronic position performs unexpectedly, Holy Stone 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 Holy Stone will offset losses from the drop in Holy Stone's long position.| Champion Microelectronic vs. Nuvoton Technology Corp | Champion Microelectronic vs. Generalplus Technology | Champion Microelectronic vs. Holtek Semiconductor | Champion Microelectronic vs. Scientech Corp |
| Holy Stone vs. Walsin Technology Corp | Holy Stone vs. Yageo Corp | Holy Stone vs. Tripod Technology Corp | Holy Stone vs. Asia Optical 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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