Correlation Between Parade Technologies and Cheng Fwa
Can any of the company-specific risk be diversified away by investing in both Parade Technologies and Cheng Fwa 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 Parade Technologies and Cheng Fwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parade Technologies and Cheng Fwa Industrial, you can compare the effects of market volatilities on Parade Technologies and Cheng Fwa 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 Parade Technologies with a short position of Cheng Fwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parade Technologies and Cheng Fwa.
Diversification Opportunities for Parade Technologies and Cheng Fwa
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Parade and Cheng is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Parade Technologies and Cheng Fwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Fwa Industrial and Parade Technologies 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 Parade Technologies are associated (or correlated) with Cheng Fwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Fwa Industrial has no effect on the direction of Parade Technologies i.e., Parade Technologies and Cheng Fwa go up and down completely randomly.
Pair Corralation between Parade Technologies and Cheng Fwa
Assuming the 90 days trading horizon Parade Technologies is expected to generate 9.05 times less return on investment than Cheng Fwa. But when comparing it to its historical volatility, Parade Technologies is 1.17 times less risky than Cheng Fwa. It trades about 0.01 of its potential returns per unit of risk. Cheng Fwa Industrial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,407 in Cheng Fwa Industrial on September 3, 2024 and sell it today you would earn a total of 1,873 from holding Cheng Fwa Industrial or generate 133.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parade Technologies vs. Cheng Fwa Industrial
Performance |
| Timeline |
| Parade Technologies |
| Cheng Fwa Industrial |
Parade Technologies and Cheng Fwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parade Technologies and Cheng Fwa
The main advantage of trading using opposite Parade Technologies and Cheng Fwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parade Technologies position performs unexpectedly, Cheng Fwa 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 Fwa will offset losses from the drop in Cheng Fwa's long position.| Parade Technologies vs. Aspeed Technology | Parade Technologies vs. Silergy Corp | Parade Technologies vs. Novatek Microelectronics Corp | Parade Technologies vs. WIN Semiconductors |
| Cheng Fwa vs. Nankang Rubber Tire | Cheng Fwa vs. Newretail Co | Cheng Fwa vs. Cheng Mei Materials | Cheng Fwa vs. Tradetool Auto 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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