Correlation Between Lungyen Life and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Lungyen Life and Chung Hwa 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 Lungyen Life and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lungyen Life Service and Chung Hwa Chemical, you can compare the effects of market volatilities on Lungyen Life and Chung Hwa 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 Lungyen Life with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lungyen Life and Chung Hwa.
Diversification Opportunities for Lungyen Life and Chung Hwa
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lungyen and Chung is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lungyen Life Service and Chung Hwa Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Chemical and Lungyen Life 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 Lungyen Life Service are associated (or correlated) with Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Chemical has no effect on the direction of Lungyen Life i.e., Lungyen Life and Chung Hwa go up and down completely randomly.
Pair Corralation between Lungyen Life and Chung Hwa
Assuming the 90 days trading horizon Lungyen Life Service is expected to under-perform the Chung Hwa. But the stock apears to be less risky and, when comparing its historical volatility, Lungyen Life Service is 1.63 times less risky than Chung Hwa. The stock trades about -0.19 of its potential returns per unit of risk. The Chung Hwa Chemical is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,930 in Chung Hwa Chemical on October 21, 2024 and sell it today you would lose (85.00) from holding Chung Hwa Chemical or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lungyen Life Service vs. Chung Hwa Chemical
Performance |
| Timeline |
| Lungyen Life Service |
| Chung Hwa Chemical |
Lungyen Life and Chung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lungyen Life and Chung Hwa
The main advantage of trading using opposite Lungyen Life and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lungyen Life position performs unexpectedly, Chung Hwa 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 Chung Hwa will offset losses from the drop in Chung Hwa's long position.| Lungyen Life vs. Cleanaway Co | Lungyen Life vs. StShine Optical Co | Lungyen Life vs. Formosa International Hotels | Lungyen Life vs. Poya International Co |
| Chung Hwa vs. Oriental Union Chemical | Chung Hwa vs. Everlight Chemical Industrial | Chung Hwa vs. Formosan Union Chemical | Chung Hwa vs. Sesoda 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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