Correlation Between Chong Hong and Simplo Technology
Can any of the company-specific risk be diversified away by investing in both Chong Hong and Simplo Technology 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 Simplo Technology 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 Simplo Technology Co, you can compare the effects of market volatilities on Chong Hong and Simplo Technology 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 Simplo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and Simplo Technology.
Diversification Opportunities for Chong Hong and Simplo Technology
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chong and Simplo is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo Technology 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 Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of Chong Hong i.e., Chong Hong and Simplo Technology go up and down completely randomly.
Pair Corralation between Chong Hong and Simplo Technology
Assuming the 90 days trading horizon Chong Hong is expected to generate 3.56 times less return on investment than Simplo Technology. But when comparing it to its historical volatility, Chong Hong Construction is 1.12 times less risky than Simplo Technology. It trades about 0.05 of its potential returns per unit of risk. Simplo Technology Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 34,250 in Simplo Technology Co on September 1, 2024 and sell it today you would earn a total of 3,450 from holding Simplo Technology Co or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chong Hong Construction vs. Simplo Technology Co
Performance |
| Timeline |
| Chong Hong Construction |
| Simplo Technology |
Chong Hong and Simplo Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chong Hong and Simplo Technology
The main advantage of trading using opposite Chong Hong and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, Simplo Technology 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 Simplo Technology will offset losses from the drop in Simplo Technology's long position.| Chong Hong vs. Ruentex Development Co | Chong Hong vs. CTCI Corp | Chong Hong vs. Information Technology Total | Chong Hong vs. Ennoconn Corp |
| Simplo Technology vs. Dynapack International Technology | Simplo Technology vs. Catcher Technology Co | Simplo Technology vs. Delta Electronics | Simplo Technology vs. Powertech Technology |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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