Correlation Between Chong Hong and Inventec Corp
Can any of the company-specific risk be diversified away by investing in both Chong Hong and Inventec Corp 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 Chong Hong and Inventec Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chong Hong Construction and Inventec Corp, you can compare the effects of market volatilities on Chong Hong and Inventec Corp 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 Chong Hong with a short position of Inventec Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and Inventec Corp.
Diversification Opportunities for Chong Hong and Inventec Corp
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chong and Inventec is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and Inventec Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventec Corp and Chong Hong 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 Chong Hong Construction are associated (or correlated) with Inventec Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventec Corp has no effect on the direction of Chong Hong i.e., Chong Hong and Inventec Corp go up and down completely randomly.
Pair Corralation between Chong Hong and Inventec Corp
Assuming the 90 days trading horizon Chong Hong Construction is expected to generate 0.9 times more return on investment than Inventec Corp. However, Chong Hong Construction is 1.11 times less risky than Inventec Corp. It trades about 0.47 of its potential returns per unit of risk. Inventec Corp is currently generating about 0.11 per unit of risk. If you would invest 8,370 in Chong Hong Construction on November 28, 2024 and sell it today you would earn a total of 1,330 from holding Chong Hong Construction or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chong Hong Construction vs. Inventec Corp
Performance |
| Timeline |
| Chong Hong Construction |
| Inventec Corp |
Chong Hong and Inventec Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chong Hong and Inventec Corp
The main advantage of trading using opposite Chong Hong and Inventec Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, Inventec Corp 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 Inventec Corp will offset losses from the drop in Inventec Corp's long position.| Chong Hong vs. Huaku Development Co | Chong Hong vs. Farglory Land Development | Chong Hong vs. Highwealth Construction Corp | Chong Hong vs. Ruentex Development Co |
| Inventec Corp vs. Compal Electronics | Inventec Corp vs. Quanta Computer | Inventec Corp vs. Wistron Corp | Inventec Corp vs. Lite On Technology 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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