Correlation Between Chung Lien and Hi Lai
Can any of the company-specific risk be diversified away by investing in both Chung Lien and Hi Lai 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 Chung Lien and Hi Lai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Lien Transportation and Hi Lai Foods Co, you can compare the effects of market volatilities on Chung Lien and Hi Lai 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 Chung Lien with a short position of Hi Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and Hi Lai.
Diversification Opportunities for Chung Lien and Hi Lai
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and 1268 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation and Hi Lai Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Lai Foods and Chung Lien 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 Chung Lien Transportation are associated (or correlated) with Hi Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Lai Foods has no effect on the direction of Chung Lien i.e., Chung Lien and Hi Lai go up and down completely randomly.
Pair Corralation between Chung Lien and Hi Lai
Assuming the 90 days trading horizon Chung Lien Transportation is expected to under-perform the Hi Lai. But the stock apears to be less risky and, when comparing its historical volatility, Chung Lien Transportation is 2.15 times less risky than Hi Lai. The stock trades about -0.07 of its potential returns per unit of risk. The Hi Lai Foods Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 12,035 in Hi Lai Foods Co on October 24, 2024 and sell it today you would earn a total of 3,215 from holding Hi Lai Foods Co or generate 26.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Lien Transportation vs. Hi Lai Foods Co
Performance |
| Timeline |
| Chung Lien Transportation |
| Hi Lai Foods |
Chung Lien and Hi Lai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Lien and Hi Lai
The main advantage of trading using opposite Chung Lien and Hi Lai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien position performs unexpectedly, Hi Lai 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 Hi Lai will offset losses from the drop in Hi Lai's long position.| Chung Lien vs. Sinopower Semiconductor | Chung Lien vs. Cleanaway Co | Chung Lien vs. Tai Tung Communication | Chung Lien vs. Hannstar Display Corp |
| Hi Lai vs. Chi Hua Fitness | Hi Lai vs. Elite Semiconductor Memory | Hi Lai vs. Onyx Healthcare | Hi Lai vs. Chung Lien Transportation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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