Correlation Between Chi Sheng and Medeon Biodesign
Can any of the company-specific risk be diversified away by investing in both Chi Sheng and Medeon Biodesign 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 Chi Sheng and Medeon Biodesign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chi Sheng Chemical and Medeon Biodesign, you can compare the effects of market volatilities on Chi Sheng and Medeon Biodesign 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 Chi Sheng with a short position of Medeon Biodesign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Sheng and Medeon Biodesign.
Diversification Opportunities for Chi Sheng and Medeon Biodesign
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chi and Medeon is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Chi Sheng Chemical and Medeon Biodesign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medeon Biodesign and Chi Sheng 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 Chi Sheng Chemical are associated (or correlated) with Medeon Biodesign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medeon Biodesign has no effect on the direction of Chi Sheng i.e., Chi Sheng and Medeon Biodesign go up and down completely randomly.
Pair Corralation between Chi Sheng and Medeon Biodesign
Assuming the 90 days trading horizon Chi Sheng Chemical is expected to generate 1.4 times more return on investment than Medeon Biodesign. However, Chi Sheng is 1.4 times more volatile than Medeon Biodesign. It trades about 0.08 of its potential returns per unit of risk. Medeon Biodesign is currently generating about -0.29 per unit of risk. If you would invest 2,790 in Chi Sheng Chemical on October 21, 2024 and sell it today you would earn a total of 50.00 from holding Chi Sheng Chemical or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Sheng Chemical vs. Medeon Biodesign
Performance |
| Timeline |
| Chi Sheng Chemical |
| Medeon Biodesign |
Chi Sheng and Medeon Biodesign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Sheng and Medeon Biodesign
The main advantage of trading using opposite Chi Sheng and Medeon Biodesign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Sheng position performs unexpectedly, Medeon Biodesign 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 Medeon Biodesign will offset losses from the drop in Medeon Biodesign's long position.| Chi Sheng vs. Tainet Communication System | Chi Sheng vs. China Mobile | Chi Sheng vs. Cameo Communications | Chi Sheng vs. Jia Jie Biomedical |
| Medeon Biodesign vs. Sunspring Metal Corp | Medeon Biodesign vs. Fong Chien Construction | Medeon Biodesign vs. Chernan Metal Industrial | Medeon Biodesign vs. Dawushan Farm Tech |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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