Correlation Between Chung Hwa and Macroblock
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and Macroblock 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 Macroblock 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 Macroblock, you can compare the effects of market volatilities on Chung Hwa and Macroblock 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 Macroblock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Macroblock.
Diversification Opportunities for Chung Hwa and Macroblock
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chung and Macroblock is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Food and Macroblock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macroblock 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 Macroblock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macroblock has no effect on the direction of Chung Hwa i.e., Chung Hwa and Macroblock go up and down completely randomly.
Pair Corralation between Chung Hwa and Macroblock
Assuming the 90 days trading horizon Chung Hwa Food is expected to under-perform the Macroblock. But the stock apears to be less risky and, when comparing its historical volatility, Chung Hwa Food is 9.42 times less risky than Macroblock. The stock trades about -0.27 of its potential returns per unit of risk. The Macroblock is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,840 in Macroblock on October 24, 2024 and sell it today you would earn a total of 800.00 from holding Macroblock or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Food vs. Macroblock
Performance |
| Timeline |
| Chung Hwa Food |
| Macroblock |
Chung Hwa and Macroblock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and Macroblock
The main advantage of trading using opposite Chung Hwa and Macroblock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, Macroblock 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 Macroblock will offset losses from the drop in Macroblock's long position.| Chung Hwa vs. Standard Chemical Pharmaceutical | Chung Hwa vs. Hi Lai Foods Co | Chung Hwa vs. An Shin Food Services | Chung Hwa vs. International Games System |
| Macroblock vs. RiTdisplay Corp | Macroblock vs. Shin Kong Financial | Macroblock vs. Taichung Commercial Bank | Macroblock vs. Yuanta Financial Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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