Correlation Between Chain Chon and Fu Burg
Can any of the company-specific risk be diversified away by investing in both Chain Chon and Fu Burg 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 Chain Chon and Fu Burg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chain Chon Industrial and Fu Burg Industrial, you can compare the effects of market volatilities on Chain Chon and Fu Burg 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 Chain Chon with a short position of Fu Burg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chain Chon and Fu Burg.
Diversification Opportunities for Chain Chon and Fu Burg
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chain and 8929 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chain Chon Industrial and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg Industrial and Chain Chon 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 Chain Chon Industrial are associated (or correlated) with Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of Chain Chon i.e., Chain Chon and Fu Burg go up and down completely randomly.
Pair Corralation between Chain Chon and Fu Burg
Assuming the 90 days trading horizon Chain Chon is expected to generate 9.88 times less return on investment than Fu Burg. But when comparing it to its historical volatility, Chain Chon Industrial is 1.33 times less risky than Fu Burg. It trades about 0.01 of its potential returns per unit of risk. Fu Burg Industrial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,175 in Fu Burg Industrial on September 2, 2024 and sell it today you would earn a total of 1,220 from holding Fu Burg Industrial or generate 56.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chain Chon Industrial vs. Fu Burg Industrial
Performance |
| Timeline |
| Chain Chon Industrial |
| Fu Burg Industrial |
Chain Chon and Fu Burg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chain Chon and Fu Burg
The main advantage of trading using opposite Chain Chon and Fu Burg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chain Chon position performs unexpectedly, Fu Burg 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 Fu Burg will offset losses from the drop in Fu Burg's long position.| Chain Chon vs. Trade Van Information Services | Chain Chon vs. C Media Electronics | Chain Chon vs. Mitake Information | Chain Chon vs. Pili International Multimedia |
| Fu Burg vs. Gloria Material Technology | Fu Burg vs. Wei Chih Steel | Fu Burg vs. Daxin Materials Corp | Fu Burg vs. Nankang Rubber Tire |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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