Correlation Between Aspeed Technology and Ching Feng
Can any of the company-specific risk be diversified away by investing in both Aspeed Technology and Ching Feng 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 Aspeed Technology and Ching Feng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspeed Technology and Ching Feng Home, you can compare the effects of market volatilities on Aspeed Technology and Ching Feng 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 Aspeed Technology with a short position of Ching Feng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspeed Technology and Ching Feng.
Diversification Opportunities for Aspeed Technology and Ching Feng
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aspeed and Ching is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and Ching Feng Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ching Feng Home and Aspeed Technology 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 Aspeed Technology are associated (or correlated) with Ching Feng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ching Feng Home has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and Ching Feng go up and down completely randomly.
Pair Corralation between Aspeed Technology and Ching Feng
Assuming the 90 days trading horizon Aspeed Technology is expected to generate 2.8 times more return on investment than Ching Feng. However, Aspeed Technology is 2.8 times more volatile than Ching Feng Home. It trades about 0.12 of its potential returns per unit of risk. Ching Feng Home is currently generating about 0.13 per unit of risk. If you would invest 335,500 in Aspeed Technology on November 3, 2024 and sell it today you would earn a total of 19,500 from holding Aspeed Technology or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspeed Technology vs. Ching Feng Home
Performance |
| Timeline |
| Aspeed Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ching Feng Home |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aspeed Technology and Ching Feng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspeed Technology and Ching Feng
The main advantage of trading using opposite Aspeed Technology and Ching Feng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspeed Technology position performs unexpectedly, Ching Feng 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 Ching Feng will offset losses from the drop in Ching Feng's long position.The idea behind Aspeed Technology and Ching Feng Home pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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