Correlation Between Chernan Metal and Cheng Fwa
Can any of the company-specific risk be diversified away by investing in both Chernan Metal 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 Chernan Metal and Cheng Fwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chernan Metal Industrial and Cheng Fwa Industrial, you can compare the effects of market volatilities on Chernan Metal 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 Chernan Metal with a short position of Cheng Fwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chernan Metal and Cheng Fwa.
Diversification Opportunities for Chernan Metal and Cheng Fwa
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chernan and Cheng is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chernan Metal Industrial 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 Chernan Metal 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 Chernan Metal Industrial 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 Chernan Metal i.e., Chernan Metal and Cheng Fwa go up and down completely randomly.
Pair Corralation between Chernan Metal and Cheng Fwa
Assuming the 90 days trading horizon Chernan Metal Industrial is expected to under-perform the Cheng Fwa. But the stock apears to be less risky and, when comparing its historical volatility, Chernan Metal Industrial is 1.71 times less risky than Cheng Fwa. The stock trades about -0.17 of its potential returns per unit of risk. The Cheng Fwa Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Cheng Fwa Industrial on September 3, 2024 and sell it today you would earn a total of 380.00 from holding Cheng Fwa Industrial or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chernan Metal Industrial vs. Cheng Fwa Industrial
Performance |
| Timeline |
| Chernan Metal Industrial |
| Cheng Fwa Industrial |
Chernan Metal and Cheng Fwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chernan Metal and Cheng Fwa
The main advantage of trading using opposite Chernan Metal and Cheng Fwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chernan Metal 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.| Chernan Metal vs. Catcher Technology Co | Chernan Metal vs. Solar Applied Materials | Chernan Metal vs. Evergreen Steel Corp | Chernan Metal vs. China Metal Products |
| 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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