Correlation Between Chailease Holding and Action Electronics
Can any of the company-specific risk be diversified away by investing in both Chailease Holding and Action Electronics 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 Chailease Holding and Action Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chailease Holding Co and Action Electronics Co, you can compare the effects of market volatilities on Chailease Holding and Action Electronics 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 Chailease Holding with a short position of Action Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chailease Holding and Action Electronics.
Diversification Opportunities for Chailease Holding and Action Electronics
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chailease and Action is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chailease Holding Co and Action Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Action Electronics and Chailease Holding 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 Chailease Holding Co are associated (or correlated) with Action Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Action Electronics has no effect on the direction of Chailease Holding i.e., Chailease Holding and Action Electronics go up and down completely randomly.
Pair Corralation between Chailease Holding and Action Electronics
Assuming the 90 days trading horizon Chailease Holding Co is expected to under-perform the Action Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Chailease Holding Co is 1.01 times less risky than Action Electronics. The stock trades about -0.44 of its potential returns per unit of risk. The Action Electronics Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,760 in Action Electronics Co on September 1, 2024 and sell it today you would earn a total of 325.00 from holding Action Electronics Co or generate 18.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chailease Holding Co vs. Action Electronics Co
Performance |
| Timeline |
| Chailease Holding |
| Action Electronics |
Chailease Holding and Action Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chailease Holding and Action Electronics
The main advantage of trading using opposite Chailease Holding and Action Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chailease Holding position performs unexpectedly, Action Electronics 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 Action Electronics will offset losses from the drop in Action Electronics' long position.| Chailease Holding vs. Fubon Financial Holding | Chailease Holding vs. CTBC Financial Holding | Chailease Holding vs. Mega Financial Holding | Chailease Holding vs. Cathay Financial Holding |
| Action Electronics vs. Chaintech Technology Corp | Action Electronics vs. AVerMedia Technologies | Action Electronics vs. Avision | Action Electronics vs. Clevo 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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