Correlation Between Daxin Materials and Cheng Shin
Can any of the company-specific risk be diversified away by investing in both Daxin Materials and Cheng Shin 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 Cheng Shin 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 Cheng Shin Rubber, you can compare the effects of market volatilities on Daxin Materials and Cheng Shin 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 Cheng Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daxin Materials and Cheng Shin.
Diversification Opportunities for Daxin Materials and Cheng Shin
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daxin and Cheng is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Daxin Materials Corp and Cheng Shin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Shin Rubber 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 Cheng Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Shin Rubber has no effect on the direction of Daxin Materials i.e., Daxin Materials and Cheng Shin go up and down completely randomly.
Pair Corralation between Daxin Materials and Cheng Shin
Assuming the 90 days trading horizon Daxin Materials Corp is expected to under-perform the Cheng Shin. In addition to that, Daxin Materials is 1.06 times more volatile than Cheng Shin Rubber. It trades about -0.02 of its total potential returns per unit of risk. Cheng Shin Rubber is currently generating about 0.16 per unit of volatility. If you would invest 4,675 in Cheng Shin Rubber on August 26, 2024 and sell it today you would earn a total of 465.00 from holding Cheng Shin Rubber or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daxin Materials Corp vs. Cheng Shin Rubber
Performance |
| Timeline |
| Daxin Materials Corp |
| Cheng Shin Rubber |
Daxin Materials and Cheng Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daxin Materials and Cheng Shin
The main advantage of trading using opposite Daxin Materials and Cheng Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daxin Materials position performs unexpectedly, Cheng Shin 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 Shin will offset losses from the drop in Cheng Shin's long position.| Daxin Materials vs. Cheng Shin Rubber | Daxin Materials vs. Taiwan Cement Corp | Daxin Materials vs. China Steel Chemical | Daxin Materials vs. Yulon Motor Co |
| Cheng Shin vs. Taiwan Semiconductor Manufacturing | Cheng Shin vs. Hon Hai Precision | Cheng Shin vs. MediaTek | Cheng Shin vs. Chunghwa Telecom 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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