Correlation Between Chung Hwa and Optivision Technology
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and Optivision 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 Optivision 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 Optivision Technology, you can compare the effects of market volatilities on Chung Hwa and Optivision 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 Optivision Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Optivision Technology.
Diversification Opportunities for Chung Hwa and Optivision Technology
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and Optivision is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Food and Optivision Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optivision 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 Optivision Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optivision Technology has no effect on the direction of Chung Hwa i.e., Chung Hwa and Optivision Technology go up and down completely randomly.
Pair Corralation between Chung Hwa and Optivision Technology
Assuming the 90 days trading horizon Chung Hwa Food is expected to generate 0.16 times more return on investment than Optivision Technology. However, Chung Hwa Food is 6.22 times less risky than Optivision Technology. It trades about -0.15 of its potential returns per unit of risk. Optivision Technology is currently generating about -0.07 per unit of risk. If you would invest 9,160 in Chung Hwa Food on September 3, 2024 and sell it today you would lose (360.00) from holding Chung Hwa Food or give up 3.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Food vs. Optivision Technology
Performance |
| Timeline |
| Chung Hwa Food |
| Optivision Technology |
Chung Hwa and Optivision Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and Optivision Technology
The main advantage of trading using opposite Chung Hwa and Optivision Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, Optivision 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 Optivision Technology will offset losses from the drop in Optivision Technology'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 |
| Optivision Technology vs. Chung Hwa Food | Optivision Technology vs. Tehmag Foods | Optivision Technology vs. Standard Foods Corp | Optivision Technology vs. Hannstar Display 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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