Correlation Between Chung Lien and Pili International
Can any of the company-specific risk be diversified away by investing in both Chung Lien and Pili 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 Chung Lien and Pili International 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 Pili International Multimedia, you can compare the effects of market volatilities on Chung Lien and Pili 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 Chung Lien with a short position of Pili International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and Pili International.
Diversification Opportunities for Chung Lien and Pili International
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chung and Pili is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation and Pili International Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pili International 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 Pili International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pili International has no effect on the direction of Chung Lien i.e., Chung Lien and Pili International go up and down completely randomly.
Pair Corralation between Chung Lien and Pili International
Assuming the 90 days trading horizon Chung Lien Transportation is expected to under-perform the Pili International. But the stock apears to be less risky and, when comparing its historical volatility, Chung Lien Transportation is 2.14 times less risky than Pili International. The stock trades about -0.04 of its potential returns per unit of risk. The Pili International Multimedia is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,370 in Pili International Multimedia on November 3, 2024 and sell it today you would lose (70.00) from holding Pili International Multimedia or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Lien Transportation vs. Pili International Multimedia
Performance |
| Timeline |
| Chung Lien Transportation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pili International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chung Lien and Pili International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Lien and Pili International
The main advantage of trading using opposite Chung Lien and Pili International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien position performs unexpectedly, Pili 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 Pili International will offset losses from the drop in Pili International's long position.The idea behind Chung Lien Transportation and Pili International Multimedia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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