Correlation Between Chong Hong and Information Technology
Can any of the company-specific risk be diversified away by investing in both Chong Hong and Information 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 Information 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 Information Technology Total, you can compare the effects of market volatilities on Chong Hong and Information 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 Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and Information Technology.
Diversification Opportunities for Chong Hong and Information Technology
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chong and Information is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information 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 Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Chong Hong i.e., Chong Hong and Information Technology go up and down completely randomly.
Pair Corralation between Chong Hong and Information Technology
Assuming the 90 days trading horizon Chong Hong Construction is expected to generate 1.44 times more return on investment than Information Technology. However, Chong Hong is 1.44 times more volatile than Information Technology Total. It trades about 0.05 of its potential returns per unit of risk. Information Technology Total is currently generating about -0.23 per unit of risk. If you would invest 8,750 in Chong Hong Construction on September 1, 2024 and sell it today you would earn a total of 200.00 from holding Chong Hong Construction or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chong Hong Construction vs. Information Technology Total
Performance |
| Timeline |
| Chong Hong Construction |
| Information Technology |
Chong Hong and Information Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chong Hong and Information Technology
The main advantage of trading using opposite Chong Hong and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, Information 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 Information Technology will offset losses from the drop in Information 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 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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