Correlation Between Daxin Materials and Chung Fu
Can any of the company-specific risk be diversified away by investing in both Daxin Materials and Chung Fu 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 Daxin Materials and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daxin Materials Corp and Chung Fu Tex International, you can compare the effects of market volatilities on Daxin Materials and Chung Fu 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 Daxin Materials with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daxin Materials and Chung Fu.
Diversification Opportunities for Daxin Materials and Chung Fu
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daxin and Chung is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Daxin Materials Corp and Chung Fu Tex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Fu Tex and Daxin Materials 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 Daxin Materials Corp are associated (or correlated) with Chung Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Fu Tex has no effect on the direction of Daxin Materials i.e., Daxin Materials and Chung Fu go up and down completely randomly.
Pair Corralation between Daxin Materials and Chung Fu
Assuming the 90 days trading horizon Daxin Materials Corp is expected to under-perform the Chung Fu. In addition to that, Daxin Materials is 2.01 times more volatile than Chung Fu Tex International. It trades about -0.21 of its total potential returns per unit of risk. Chung Fu Tex International is currently generating about -0.14 per unit of volatility. If you would invest 4,350 in Chung Fu Tex International on September 12, 2024 and sell it today you would lose (250.00) from holding Chung Fu Tex International or give up 5.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Daxin Materials Corp vs. Chung Fu Tex International
Performance |
| Timeline |
| Daxin Materials Corp |
| Chung Fu Tex |
Daxin Materials and Chung Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daxin Materials and Chung Fu
The main advantage of trading using opposite Daxin Materials and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daxin Materials position performs unexpectedly, Chung Fu 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 Chung Fu will offset losses from the drop in Chung Fu's long position.| Daxin Materials vs. Tainan Spinning Co | Daxin Materials vs. Lealea Enterprise Co | Daxin Materials vs. China Petrochemical Development | Daxin Materials vs. Ruentex Development Co |
| Chung Fu vs. Tehmag Foods | Chung Fu vs. China Steel Corp | Chung Fu vs. ECOVE Environment Corp | Chung Fu vs. Taiwan Steel Union |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |