Correlation Between Chong Hong and Medtecs International
Can any of the company-specific risk be diversified away by investing in both Chong Hong and Medtecs International 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 Medtecs International 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 Medtecs International, you can compare the effects of market volatilities on Chong Hong and Medtecs International 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 Medtecs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and Medtecs International.
Diversification Opportunities for Chong Hong and Medtecs International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chong and Medtecs is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and Medtecs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtecs International 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 Medtecs International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtecs International has no effect on the direction of Chong Hong i.e., Chong Hong and Medtecs International go up and down completely randomly.
Pair Corralation between Chong Hong and Medtecs International
Assuming the 90 days trading horizon Chong Hong Construction is expected to under-perform the Medtecs International. In addition to that, Chong Hong is 2.05 times more volatile than Medtecs International. It trades about -0.16 of its total potential returns per unit of risk. Medtecs International is currently generating about -0.16 per unit of volatility. If you would invest 706.00 in Medtecs International on September 2, 2024 and sell it today you would lose (78.00) from holding Medtecs International or give up 11.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chong Hong Construction vs. Medtecs International
Performance |
| Timeline |
| Chong Hong Construction |
| Medtecs International |
Chong Hong and Medtecs International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chong Hong and Medtecs International
The main advantage of trading using opposite Chong Hong and Medtecs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, Medtecs International 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 Medtecs International will offset losses from the drop in Medtecs International'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 |
| Medtecs International vs. Universal Vision Biotechnology | Medtecs International vs. Excelsior Medical Co | Medtecs International vs. Hi Clearance | Medtecs International vs. Brighten Optix |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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