Correlation Between Chung Hwa and Adata Technology
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and Adata Technology 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 Adata Technology 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 Adata Technology Co, you can compare the effects of market volatilities on Chung Hwa and Adata Technology 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 Adata Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Adata Technology.
Diversification Opportunities for Chung Hwa and Adata Technology
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chung and Adata is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Food and Adata Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adata Technology 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 Adata Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adata Technology has no effect on the direction of Chung Hwa i.e., Chung Hwa and Adata Technology go up and down completely randomly.
Pair Corralation between Chung Hwa and Adata Technology
Assuming the 90 days trading horizon Chung Hwa Food is expected to under-perform the Adata Technology. But the stock apears to be less risky and, when comparing its historical volatility, Chung Hwa Food is 4.65 times less risky than Adata Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Adata Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,036 in Adata Technology Co on October 23, 2024 and sell it today you would earn a total of 1,764 from holding Adata Technology Co or generate 29.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Food vs. Adata Technology Co
Performance |
| Timeline |
| Chung Hwa Food |
| Adata Technology |
Chung Hwa and Adata Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and Adata Technology
The main advantage of trading using opposite Chung Hwa and Adata Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, Adata Technology 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 Adata Technology will offset losses from the drop in Adata Technology's long position.| Chung Hwa vs. Shinkong Insurance Co | Chung Hwa vs. Dadi Early Childhood Education | Chung Hwa vs. CHINA DEVELOPMENT FINANCIAL | Chung Hwa vs. Chung Lien Transportation |
| Adata Technology vs. Transcend Information | Adata Technology vs. Phison Electronics | Adata Technology vs. Nanya Technology Corp | Adata Technology vs. Innolux 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |