Correlation Between Chien Kuo and Chumpower Machinery
Can any of the company-specific risk be diversified away by investing in both Chien Kuo and Chumpower Machinery 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 Chien Kuo and Chumpower Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chien Kuo Construction and Chumpower Machinery Corp, you can compare the effects of market volatilities on Chien Kuo and Chumpower Machinery 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 Chien Kuo with a short position of Chumpower Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chien Kuo and Chumpower Machinery.
Diversification Opportunities for Chien Kuo and Chumpower Machinery
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chien and Chumpower is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chien Kuo Construction and Chumpower Machinery Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chumpower Machinery Corp and Chien Kuo 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 Chien Kuo Construction are associated (or correlated) with Chumpower Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chumpower Machinery Corp has no effect on the direction of Chien Kuo i.e., Chien Kuo and Chumpower Machinery go up and down completely randomly.
Pair Corralation between Chien Kuo and Chumpower Machinery
Assuming the 90 days trading horizon Chien Kuo is expected to generate 1.02 times less return on investment than Chumpower Machinery. But when comparing it to its historical volatility, Chien Kuo Construction is 1.1 times less risky than Chumpower Machinery. It trades about 0.16 of its potential returns per unit of risk. Chumpower Machinery Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,185 in Chumpower Machinery Corp on October 23, 2024 and sell it today you would earn a total of 115.00 from holding Chumpower Machinery Corp or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chien Kuo Construction vs. Chumpower Machinery Corp
Performance |
| Timeline |
| Chien Kuo Construction |
| Chumpower Machinery Corp |
Chien Kuo and Chumpower Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chien Kuo and Chumpower Machinery
The main advantage of trading using opposite Chien Kuo and Chumpower Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chien Kuo position performs unexpectedly, Chumpower Machinery 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 Chumpower Machinery will offset losses from the drop in Chumpower Machinery's long position.| Chien Kuo vs. BES Engineering Co | Chien Kuo vs. Continental Holdings Corp | Chien Kuo vs. Kee Tai Properties | Chien Kuo vs. Hung Sheng Construction |
| Chumpower Machinery vs. Asustek Computer | Chumpower Machinery vs. Holtek Semiconductor | Chumpower Machinery vs. Taiwan Speciality Chemicals | Chumpower Machinery vs. Cameo Communications |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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