Correlation Between Chung Lien and Jetwell Computer
Can any of the company-specific risk be diversified away by investing in both Chung Lien and Jetwell Computer 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 Jetwell Computer 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 Jetwell Computer Co, you can compare the effects of market volatilities on Chung Lien and Jetwell Computer 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 Jetwell Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and Jetwell Computer.
Diversification Opportunities for Chung Lien and Jetwell Computer
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Jetwell is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation and Jetwell Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jetwell Computer 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 Jetwell Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jetwell Computer has no effect on the direction of Chung Lien i.e., Chung Lien and Jetwell Computer go up and down completely randomly.
Pair Corralation between Chung Lien and Jetwell Computer
Assuming the 90 days trading horizon Chung Lien Transportation is expected to under-perform the Jetwell Computer. But the stock apears to be less risky and, when comparing its historical volatility, Chung Lien Transportation is 6.33 times less risky than Jetwell Computer. The stock trades about -0.04 of its potential returns per unit of risk. The Jetwell Computer Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 13,550 in Jetwell Computer Co on September 14, 2024 and sell it today you would earn a total of 2,100 from holding Jetwell Computer Co or generate 15.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Lien Transportation vs. Jetwell Computer Co
Performance |
| Timeline |
| Chung Lien Transportation |
| Jetwell Computer |
Chung Lien and Jetwell Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Lien and Jetwell Computer
The main advantage of trading using opposite Chung Lien and Jetwell Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien position performs unexpectedly, Jetwell Computer 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 Jetwell Computer will offset losses from the drop in Jetwell Computer's long position.| Chung Lien vs. Kerry TJ Logistics | Chung Lien vs. Shan Loong Transportation Co | Chung Lien vs. YuantaP shares Taiwan Top | Chung Lien vs. YuantaP shares Taiwan Electronics |
| Jetwell Computer vs. Phoenix Silicon International | Jetwell Computer vs. Sports Gear Co | Jetwell Computer vs. Ching Feng Home | Jetwell Computer 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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