Correlation Between Yem Chio and Cheng Shin
Can any of the company-specific risk be diversified away by investing in both Yem Chio and Cheng Shin 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 Yem Chio and Cheng Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yem Chio Co and Cheng Shin Rubber, you can compare the effects of market volatilities on Yem Chio and Cheng Shin 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 Yem Chio with a short position of Cheng Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yem Chio and Cheng Shin.
Diversification Opportunities for Yem Chio and Cheng Shin
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Yem and Cheng is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Yem Chio Co and Cheng Shin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Shin Rubber and Yem Chio 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 Yem Chio Co are associated (or correlated) with Cheng Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Shin Rubber has no effect on the direction of Yem Chio i.e., Yem Chio and Cheng Shin go up and down completely randomly.
Pair Corralation between Yem Chio and Cheng Shin
Assuming the 90 days trading horizon Yem Chio is expected to generate 1.76 times less return on investment than Cheng Shin. But when comparing it to its historical volatility, Yem Chio Co is 1.13 times less risky than Cheng Shin. It trades about 0.04 of its potential returns per unit of risk. Cheng Shin Rubber is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,410 in Cheng Shin Rubber on September 3, 2024 and sell it today you would earn a total of 1,650 from holding Cheng Shin Rubber or generate 48.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yem Chio Co vs. Cheng Shin Rubber
Performance |
| Timeline |
| Yem Chio |
| Cheng Shin Rubber |
Yem Chio and Cheng Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yem Chio and Cheng Shin
The main advantage of trading using opposite Yem Chio and Cheng Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yem Chio position performs unexpectedly, Cheng Shin 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 Cheng Shin will offset losses from the drop in Cheng Shin's long position.| Yem Chio vs. USI Corp | Yem Chio vs. Asia Polymer Corp | Yem Chio vs. Sincere Navigation Corp | Yem Chio vs. Lealea Enterprise Co |
| Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Formosa Chemicals Fibre | Cheng Shin vs. Asia Cement Corp | Cheng Shin vs. Pou Chen 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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