Correlation Between CHC Healthcare and Abnova Taiwan
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and Abnova Taiwan 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 Abnova Taiwan 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 Abnova Taiwan Corp, you can compare the effects of market volatilities on CHC Healthcare and Abnova Taiwan 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 Abnova Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Abnova Taiwan.
Diversification Opportunities for CHC Healthcare and Abnova Taiwan
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHC and Abnova is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and Abnova Taiwan Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abnova Taiwan Corp 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 Abnova Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abnova Taiwan Corp has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and Abnova Taiwan go up and down completely randomly.
Pair Corralation between CHC Healthcare and Abnova Taiwan
Assuming the 90 days trading horizon CHC Healthcare Group is expected to generate 1.48 times more return on investment than Abnova Taiwan. However, CHC Healthcare is 1.48 times more volatile than Abnova Taiwan Corp. It trades about 0.0 of its potential returns per unit of risk. Abnova Taiwan Corp is currently generating about -0.04 per unit of risk. If you would invest 4,600 in CHC Healthcare Group on August 25, 2024 and sell it today you would lose (610.00) from holding CHC Healthcare Group or give up 13.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Healthcare Group vs. Abnova Taiwan Corp
Performance |
| Timeline |
| CHC Healthcare Group |
| Abnova Taiwan Corp |
CHC Healthcare and Abnova Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Healthcare and Abnova Taiwan
The main advantage of trading using opposite CHC Healthcare and Abnova Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, Abnova Taiwan 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 Abnova Taiwan will offset losses from the drop in Abnova Taiwan's long position.| CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Sinphar Pharmaceutical Co | CHC Healthcare vs. Abnova Taiwan Corp | CHC Healthcare vs. Wellell |
| Abnova Taiwan vs. Sinphar Pharmaceutical Co | Abnova Taiwan vs. Wellell | Abnova Taiwan vs. Phytohealth Corp | Abnova Taiwan vs. YungShin Global Holding |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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