Correlation Between Chung Hwa and Chinese Gamer
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and Chinese Gamer 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 Chung Hwa and Chinese Gamer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Hwa Food and Chinese Gamer International, you can compare the effects of market volatilities on Chung Hwa and Chinese Gamer 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 Chung Hwa with a short position of Chinese Gamer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Chinese Gamer.
Diversification Opportunities for Chung Hwa and Chinese Gamer
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chung and Chinese is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Food and Chinese Gamer International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Gamer Intern and Chung Hwa 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 Chung Hwa Food are associated (or correlated) with Chinese Gamer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Gamer Intern has no effect on the direction of Chung Hwa i.e., Chung Hwa and Chinese Gamer go up and down completely randomly.
Pair Corralation between Chung Hwa and Chinese Gamer
Assuming the 90 days trading horizon Chung Hwa Food is expected to under-perform the Chinese Gamer. But the stock apears to be less risky and, when comparing its historical volatility, Chung Hwa Food is 4.59 times less risky than Chinese Gamer. The stock trades about -0.08 of its potential returns per unit of risk. The Chinese Gamer International is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,110 in Chinese Gamer International on September 2, 2024 and sell it today you would lose (590.00) from holding Chinese Gamer International or give up 11.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Food vs. Chinese Gamer International
Performance |
| Timeline |
| Chung Hwa Food |
| Chinese Gamer Intern |
Chung Hwa and Chinese Gamer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and Chinese Gamer
The main advantage of trading using opposite Chung Hwa and Chinese Gamer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, Chinese Gamer 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 Chinese Gamer will offset losses from the drop in Chinese Gamer's long position.| Chung Hwa vs. Uni President Enterprises Corp | Chung Hwa vs. Lien Hwa Industrial | Chung Hwa vs. Great Wall Enterprise | Chung Hwa vs. Standard Foods Corp |
| Chinese Gamer vs. Genovate Biotechnology Co | Chinese Gamer vs. Universal Vision Biotechnology | Chinese Gamer vs. RiTdisplay Corp | Chinese Gamer vs. Elitegroup Computer Systems |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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