Correlation Between Chung Lien and Grand Fortune
Can any of the company-specific risk be diversified away by investing in both Chung Lien and Grand Fortune 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 Grand Fortune 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 Grand Fortune Securities, you can compare the effects of market volatilities on Chung Lien and Grand Fortune 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 Grand Fortune. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and Grand Fortune.
Diversification Opportunities for Chung Lien and Grand Fortune
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Grand is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation and Grand Fortune Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Fortune Securities 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 Grand Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Fortune Securities has no effect on the direction of Chung Lien i.e., Chung Lien and Grand Fortune go up and down completely randomly.
Pair Corralation between Chung Lien and Grand Fortune
Assuming the 90 days trading horizon Chung Lien Transportation is expected to under-perform the Grand Fortune. But the stock apears to be less risky and, when comparing its historical volatility, Chung Lien Transportation is 2.06 times less risky than Grand Fortune. The stock trades about -0.07 of its potential returns per unit of risk. The Grand Fortune Securities is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 980.00 in Grand Fortune Securities on October 25, 2024 and sell it today you would earn a total of 250.00 from holding Grand Fortune Securities or generate 25.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Chung Lien Transportation vs. Grand Fortune Securities
Performance |
| Timeline |
| Chung Lien Transportation |
| Grand Fortune Securities |
Chung Lien and Grand Fortune Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Lien and Grand Fortune
The main advantage of trading using opposite Chung Lien and Grand Fortune positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien position performs unexpectedly, Grand Fortune 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 Grand Fortune will offset losses from the drop in Grand Fortune's long position.| Chung Lien vs. Acelon Chemicals Fiber | Chung Lien vs. Prime Oil Chemical | Chung Lien vs. U Ming Marine Transport | Chung Lien vs. GameSparcs Co |
| Grand Fortune vs. Chialin Precision Industrial | Grand Fortune vs. China Mobile | Grand Fortune vs. Loop Telecommunication International | Grand Fortune vs. Wah Hong Industrial |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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