Correlation Between Cheng Mei and Galaxy Software
Can any of the company-specific risk be diversified away by investing in both Cheng Mei and Galaxy Software 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 Cheng Mei and Galaxy Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheng Mei Materials and Galaxy Software Services, you can compare the effects of market volatilities on Cheng Mei and Galaxy Software 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 Cheng Mei with a short position of Galaxy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Mei and Galaxy Software.
Diversification Opportunities for Cheng Mei and Galaxy Software
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cheng and Galaxy is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Mei Materials and Galaxy Software Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Software Services and Cheng Mei 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 Cheng Mei Materials are associated (or correlated) with Galaxy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Software Services has no effect on the direction of Cheng Mei i.e., Cheng Mei and Galaxy Software go up and down completely randomly.
Pair Corralation between Cheng Mei and Galaxy Software
Assuming the 90 days trading horizon Cheng Mei Materials is expected to generate 0.27 times more return on investment than Galaxy Software. However, Cheng Mei Materials is 3.65 times less risky than Galaxy Software. It trades about 0.16 of its potential returns per unit of risk. Galaxy Software Services is currently generating about 0.02 per unit of risk. If you would invest 1,350 in Cheng Mei Materials on October 30, 2024 and sell it today you would earn a total of 35.00 from holding Cheng Mei Materials or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Mei Materials vs. Galaxy Software Services
Performance |
| Timeline |
| Cheng Mei Materials |
| Galaxy Software Services |
Cheng Mei and Galaxy Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Mei and Galaxy Software
The main advantage of trading using opposite Cheng Mei and Galaxy Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Mei position performs unexpectedly, Galaxy Software 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 Galaxy Software will offset losses from the drop in Galaxy Software's long position.| Cheng Mei vs. HIM International Music | Cheng Mei vs. Oceanic Beverages Co | Cheng Mei vs. Loop Telecommunication International | Cheng Mei vs. C Media Electronics |
| Galaxy Software vs. Shin Kong Financial | Galaxy Software vs. Taiwan Mobile Co | Galaxy Software vs. U Media Communications | Galaxy Software vs. Taichung Commercial Bank |
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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