Correlation Between CHC Healthcare and Tang Eng
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and Tang Eng 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 CHC Healthcare and Tang Eng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Healthcare Group and Tang Eng Iron, you can compare the effects of market volatilities on CHC Healthcare and Tang Eng 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 CHC Healthcare with a short position of Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Tang Eng.
Diversification Opportunities for CHC Healthcare and Tang Eng
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHC and Tang is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron and CHC Healthcare 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 CHC Healthcare Group are associated (or correlated) with Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and Tang Eng go up and down completely randomly.
Pair Corralation between CHC Healthcare and Tang Eng
Assuming the 90 days trading horizon CHC Healthcare Group is expected to generate 0.82 times more return on investment than Tang Eng. However, CHC Healthcare Group is 1.22 times less risky than Tang Eng. It trades about 0.25 of its potential returns per unit of risk. Tang Eng Iron is currently generating about 0.01 per unit of risk. If you would invest 4,190 in CHC Healthcare Group on October 29, 2024 and sell it today you would earn a total of 255.00 from holding CHC Healthcare Group or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Healthcare Group vs. Tang Eng Iron
Performance |
| Timeline |
| CHC Healthcare Group |
| Tang Eng Iron |
CHC Healthcare and Tang Eng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Healthcare and Tang Eng
The main advantage of trading using opposite CHC Healthcare and Tang Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, Tang Eng 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 Tang Eng will offset losses from the drop in Tang Eng's long position.| CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Sinphar Pharmaceutical Co | CHC Healthcare vs. Abnova Taiwan Corp | CHC Healthcare vs. Wellell |
| Tang Eng vs. Nan Ya Plastics | Tang Eng vs. Formosa Chemicals Fibre | Tang Eng vs. China Steel Corp | Tang Eng vs. Formosa Petrochemical Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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