Correlation Between Chung Lien and Jinan Acetate
Can any of the company-specific risk be diversified away by investing in both Chung Lien and Jinan Acetate 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 Jinan Acetate 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 Jinan Acetate Chemical, you can compare the effects of market volatilities on Chung Lien and Jinan Acetate 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 Jinan Acetate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and Jinan Acetate.
Diversification Opportunities for Chung Lien and Jinan Acetate
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and Jinan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation and Jinan Acetate Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinan Acetate Chemical 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 Jinan Acetate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinan Acetate Chemical has no effect on the direction of Chung Lien i.e., Chung Lien and Jinan Acetate go up and down completely randomly.
Pair Corralation between Chung Lien and Jinan Acetate
Assuming the 90 days trading horizon Chung Lien Transportation is expected to under-perform the Jinan Acetate. But the stock apears to be less risky and, when comparing its historical volatility, Chung Lien Transportation is 4.71 times less risky than Jinan Acetate. The stock trades about -0.04 of its potential returns per unit of risk. The Jinan Acetate Chemical is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 18,085 in Jinan Acetate Chemical on August 30, 2024 and sell it today you would earn a total of 68,315 from holding Jinan Acetate Chemical or generate 377.74% 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. Jinan Acetate Chemical
Performance |
| Timeline |
| Chung Lien Transportation |
| Jinan Acetate Chemical |
Chung Lien and Jinan Acetate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Lien and Jinan Acetate
The main advantage of trading using opposite Chung Lien and Jinan Acetate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien position performs unexpectedly, Jinan Acetate 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 Jinan Acetate will offset losses from the drop in Jinan Acetate's long position.| Chung Lien vs. Datavan International | Chung Lien vs. Gigastorage Corp | Chung Lien vs. K Way Information | Chung Lien vs. Otsuka Information Technology |
| Jinan Acetate vs. San Fu Chemical | Jinan Acetate vs. Tex Year Industries | Jinan Acetate vs. Concraft Holding Co | Jinan Acetate vs. Coremax 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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