Correlation Between Chong Hong and Kunyue Development
Can any of the company-specific risk be diversified away by investing in both Chong Hong and Kunyue Development 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 Kunyue Development 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 Kunyue Development Co, you can compare the effects of market volatilities on Chong Hong and Kunyue Development 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 Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and Kunyue Development.
Diversification Opportunities for Chong Hong and Kunyue Development
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chong and Kunyue is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development 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 Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of Chong Hong i.e., Chong Hong and Kunyue Development go up and down completely randomly.
Pair Corralation between Chong Hong and Kunyue Development
Assuming the 90 days trading horizon Chong Hong is expected to generate 2.68 times less return on investment than Kunyue Development. But when comparing it to its historical volatility, Chong Hong Construction is 1.06 times less risky than Kunyue Development. It trades about 0.04 of its potential returns per unit of risk. Kunyue Development Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,441 in Kunyue Development Co on September 14, 2024 and sell it today you would earn a total of 1,719 from holding Kunyue Development Co or generate 70.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chong Hong Construction vs. Kunyue Development Co
Performance |
| Timeline |
| Chong Hong Construction |
| Kunyue Development |
Chong Hong and Kunyue Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chong Hong and Kunyue Development
The main advantage of trading using opposite Chong Hong and Kunyue Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, Kunyue Development 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 Kunyue Development will offset losses from the drop in Kunyue Development's long position.| Chong Hong vs. Ruentex Development Co | Chong Hong vs. Symtek Automation Asia | Chong Hong vs. WiseChip Semiconductor | Chong Hong vs. Novatek Microelectronics Corp |
| Kunyue Development vs. Chong Hong Construction | Kunyue Development vs. Ruentex Development Co | Kunyue Development vs. Symtek Automation Asia | Kunyue Development vs. WiseChip Semiconductor |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |