Correlation Between Topco Scientific and Chong Hong
Can any of the company-specific risk be diversified away by investing in both Topco Scientific and Chong Hong 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 Topco Scientific and Chong Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Topco Scientific Co and Chong Hong Construction, you can compare the effects of market volatilities on Topco Scientific and Chong Hong 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 Topco Scientific with a short position of Chong Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Topco Scientific and Chong Hong.
Diversification Opportunities for Topco Scientific and Chong Hong
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Topco and Chong is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Topco Scientific Co and Chong Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chong Hong Construction and Topco Scientific 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 Topco Scientific Co are associated (or correlated) with Chong Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chong Hong Construction has no effect on the direction of Topco Scientific i.e., Topco Scientific and Chong Hong go up and down completely randomly.
Pair Corralation between Topco Scientific and Chong Hong
Assuming the 90 days trading horizon Topco Scientific is expected to generate 4.0 times less return on investment than Chong Hong. But when comparing it to its historical volatility, Topco Scientific Co is 2.75 times less risky than Chong Hong. It trades about 0.3 of its potential returns per unit of risk. Chong Hong Construction is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 8,370 in Chong Hong Construction on November 28, 2024 and sell it today you would earn a total of 1,290 from holding Chong Hong Construction or generate 15.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Topco Scientific Co vs. Chong Hong Construction
Performance |
| Timeline |
| Topco Scientific |
| Chong Hong Construction |
Topco Scientific and Chong Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Topco Scientific and Chong Hong
The main advantage of trading using opposite Topco Scientific and Chong Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topco Scientific position performs unexpectedly, Chong Hong 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 Chong Hong will offset losses from the drop in Chong Hong's long position.| Topco Scientific vs. Elan Microelectronics Corp | Topco Scientific vs. Unitech Electronics Co | Topco Scientific vs. San Fu Chemical | Topco Scientific vs. Mechema Chemicals Int |
| Chong Hong vs. Huaku Development Co | Chong Hong vs. Farglory Land Development | Chong Hong vs. Highwealth Construction Corp | Chong Hong vs. Ruentex Development 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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