Correlation Between Cheng Fwa and Ho Tung
Can any of the company-specific risk be diversified away by investing in both Cheng Fwa and Ho Tung 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 Cheng Fwa and Ho Tung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheng Fwa Industrial and Ho Tung Chemical, you can compare the effects of market volatilities on Cheng Fwa and Ho Tung 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 Cheng Fwa with a short position of Ho Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Fwa and Ho Tung.
Diversification Opportunities for Cheng Fwa and Ho Tung
Very good diversification
The 3 months correlation between Cheng and 1714 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Fwa Industrial and Ho Tung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Tung Chemical and Cheng Fwa 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 Cheng Fwa Industrial are associated (or correlated) with Ho Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Tung Chemical has no effect on the direction of Cheng Fwa i.e., Cheng Fwa and Ho Tung go up and down completely randomly.
Pair Corralation between Cheng Fwa and Ho Tung
Assuming the 90 days trading horizon Cheng Fwa Industrial is expected to under-perform the Ho Tung. In addition to that, Cheng Fwa is 5.64 times more volatile than Ho Tung Chemical. It trades about -0.01 of its total potential returns per unit of risk. Ho Tung Chemical is currently generating about 0.06 per unit of volatility. If you would invest 836.00 in Ho Tung Chemical on September 4, 2024 and sell it today you would earn a total of 7.00 from holding Ho Tung Chemical or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Fwa Industrial vs. Ho Tung Chemical
Performance |
| Timeline |
| Cheng Fwa Industrial |
| Ho Tung Chemical |
Cheng Fwa and Ho Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Fwa and Ho Tung
The main advantage of trading using opposite Cheng Fwa and Ho Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Fwa position performs unexpectedly, Ho Tung 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 Ho Tung will offset losses from the drop in Ho Tung's long position.| Cheng Fwa vs. Ho Tung Chemical | Cheng Fwa vs. SynCore Biotechnology Co | Cheng Fwa vs. GeneReach Biotechnology | Cheng Fwa vs. Apex Biotechnology Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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