Correlation Between CHC Healthcare and Taiwan Speciality
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare and Taiwan Speciality 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 Taiwan Speciality 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 Taiwan Speciality Chemicals, you can compare the effects of market volatilities on CHC Healthcare and Taiwan Speciality 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 Taiwan Speciality. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Taiwan Speciality.
Diversification Opportunities for CHC Healthcare and Taiwan Speciality
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHC and Taiwan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group and Taiwan Speciality Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Speciality 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 Taiwan Speciality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Speciality has no effect on the direction of CHC Healthcare i.e., CHC Healthcare and Taiwan Speciality go up and down completely randomly.
Pair Corralation between CHC Healthcare and Taiwan Speciality
Assuming the 90 days trading horizon CHC Healthcare Group is expected to generate 0.74 times more return on investment than Taiwan Speciality. However, CHC Healthcare Group is 1.35 times less risky than Taiwan Speciality. It trades about 0.42 of its potential returns per unit of risk. Taiwan Speciality Chemicals is currently generating about -0.02 per unit of risk. If you would invest 4,430 in CHC Healthcare Group on November 29, 2024 and sell it today you would earn a total of 1,200 from holding CHC Healthcare Group or generate 27.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Healthcare Group vs. Taiwan Speciality Chemicals
Performance |
| Timeline |
| CHC Healthcare Group |
| Taiwan Speciality |
CHC Healthcare and Taiwan Speciality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Healthcare and Taiwan Speciality
The main advantage of trading using opposite CHC Healthcare and Taiwan Speciality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare position performs unexpectedly, Taiwan Speciality 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 Taiwan Speciality will offset losses from the drop in Taiwan Speciality's long position.| CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
| Taiwan Speciality vs. U Ming Marine Transport | Taiwan Speciality vs. BenQ Medical Technology | Taiwan Speciality vs. U Media Communications | Taiwan Speciality vs. Chinese Maritime Transport |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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