Correlation Between Chong Hong and CVC Technologies
Can any of the company-specific risk be diversified away by investing in both Chong Hong and CVC Technologies 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 CVC Technologies 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 CVC Technologies, you can compare the effects of market volatilities on Chong Hong and CVC Technologies 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 CVC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and CVC Technologies.
Diversification Opportunities for Chong Hong and CVC Technologies
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chong and CVC is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and CVC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Technologies 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 CVC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Technologies has no effect on the direction of Chong Hong i.e., Chong Hong and CVC Technologies go up and down completely randomly.
Pair Corralation between Chong Hong and CVC Technologies
Assuming the 90 days trading horizon Chong Hong Construction is expected to generate 0.75 times more return on investment than CVC Technologies. However, Chong Hong Construction is 1.34 times less risky than CVC Technologies. It trades about -0.09 of its potential returns per unit of risk. CVC Technologies is currently generating about -0.22 per unit of risk. If you would invest 8,470 in Chong Hong Construction on November 7, 2024 and sell it today you would lose (150.00) from holding Chong Hong Construction or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chong Hong Construction vs. CVC Technologies
Performance |
| Timeline |
| Chong Hong Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CVC Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Chong Hong and CVC Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chong Hong and CVC Technologies
The main advantage of trading using opposite Chong Hong and CVC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, CVC Technologies 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 CVC Technologies will offset losses from the drop in CVC Technologies' long position.The idea behind Chong Hong Construction and CVC Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |