Correlation Between Yong Shun and Chien Kuo
Can any of the company-specific risk be diversified away by investing in both Yong Shun and Chien Kuo 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 Yong Shun and Chien Kuo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yong Shun Chemical and Chien Kuo Construction, you can compare the effects of market volatilities on Yong Shun and Chien Kuo 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 Yong Shun with a short position of Chien Kuo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yong Shun and Chien Kuo.
Diversification Opportunities for Yong Shun and Chien Kuo
Excellent diversification
The 3 months correlation between Yong and Chien is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Yong Shun Chemical and Chien Kuo Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Kuo Construction and Yong Shun 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 Yong Shun Chemical are associated (or correlated) with Chien Kuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Kuo Construction has no effect on the direction of Yong Shun i.e., Yong Shun and Chien Kuo go up and down completely randomly.
Pair Corralation between Yong Shun and Chien Kuo
Assuming the 90 days trading horizon Yong Shun is expected to generate 5.15 times less return on investment than Chien Kuo. But when comparing it to its historical volatility, Yong Shun Chemical is 1.28 times less risky than Chien Kuo. It trades about 0.02 of its potential returns per unit of risk. Chien Kuo Construction is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,150 in Chien Kuo Construction on September 5, 2024 and sell it today you would earn a total of 1,665 from holding Chien Kuo Construction or generate 144.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yong Shun Chemical vs. Chien Kuo Construction
Performance |
| Timeline |
| Yong Shun Chemical |
| Chien Kuo Construction |
Yong Shun and Chien Kuo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yong Shun and Chien Kuo
The main advantage of trading using opposite Yong Shun and Chien Kuo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yong Shun position performs unexpectedly, Chien Kuo 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 Chien Kuo will offset losses from the drop in Chien Kuo's long position.| Yong Shun vs. Sunmax Biotechnology Co | Yong Shun vs. Feng Hsin Steel | Yong Shun vs. First Copper Technology | Yong Shun vs. Century Iron And |
| Chien Kuo vs. Universal Microelectronics Co | Chien Kuo vs. AVerMedia Technologies | Chien Kuo vs. Symtek Automation Asia | Chien Kuo vs. WiseChip Semiconductor |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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