Correlation Between Chung Hwa and Provision Information
Can any of the company-specific risk be diversified away by investing in both Chung Hwa and Provision Information 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 Provision Information 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 Provision Information CoLtd, you can compare the effects of market volatilities on Chung Hwa and Provision Information 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 Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Provision Information.
Diversification Opportunities for Chung Hwa and Provision Information
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chung and Provision is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Food and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Chung Hwa i.e., Chung Hwa and Provision Information go up and down completely randomly.
Pair Corralation between Chung Hwa and Provision Information
Assuming the 90 days trading horizon Chung Hwa Food is expected to generate 0.4 times more return on investment than Provision Information. However, Chung Hwa Food is 2.51 times less risky than Provision Information. It trades about -0.24 of its potential returns per unit of risk. Provision Information CoLtd is currently generating about -0.11 per unit of risk. If you would invest 8,750 in Chung Hwa Food on October 23, 2024 and sell it today you would lose (150.00) from holding Chung Hwa Food or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hwa Food vs. Provision Information CoLtd
Performance |
| Timeline |
| Chung Hwa Food |
| Provision Information |
Chung Hwa and Provision Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hwa and Provision Information
The main advantage of trading using opposite Chung Hwa and Provision Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hwa position performs unexpectedly, Provision Information 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 Provision Information will offset losses from the drop in Provision Information'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 |
| Provision Information vs. Sporton International | Provision Information vs. Shan Loong Transportation Co | Provision Information vs. Camellia Metal Co | Provision Information vs. Taiwan Mobile Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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