Correlation Between Chung Lien and CKM Building
Can any of the company-specific risk be diversified away by investing in both Chung Lien and CKM Building 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 CKM Building 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 CKM Building Material, you can compare the effects of market volatilities on Chung Lien and CKM Building 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 CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and CKM Building.
Diversification Opportunities for Chung Lien and CKM Building
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chung and CKM is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material 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 CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Chung Lien i.e., Chung Lien and CKM Building go up and down completely randomly.
Pair Corralation between Chung Lien and CKM Building
Assuming the 90 days trading horizon Chung Lien Transportation is expected to under-perform the CKM Building. But the stock apears to be less risky and, when comparing its historical volatility, Chung Lien Transportation is 3.66 times less risky than CKM Building. The stock trades about -0.03 of its potential returns per unit of risk. The CKM Building Material is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,430 in CKM Building Material on October 25, 2024 and sell it today you would earn a total of 165.00 from holding CKM Building Material or generate 4.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chung Lien Transportation vs. CKM Building Material
Performance |
Timeline |
Chung Lien Transportation |
CKM Building Material |
Chung Lien and CKM Building Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chung Lien and CKM Building
The main advantage of trading using opposite Chung Lien and CKM Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien position performs unexpectedly, CKM Building 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 CKM Building will offset losses from the drop in CKM Building'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 |
CKM Building vs. SuperAlloy Industrial Co, | CKM Building vs. Hi Lai Foods Co | CKM Building vs. Chung Hwa Food | CKM Building vs. Tigerair Taiwan Co |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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