Correlation Between Softstar Entertainment and Chi Sheng
Can any of the company-specific risk be diversified away by investing in both Softstar Entertainment and Chi Sheng 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 Softstar Entertainment and Chi Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softstar Entertainment and Chi Sheng Chemical, you can compare the effects of market volatilities on Softstar Entertainment and Chi Sheng 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 Softstar Entertainment with a short position of Chi Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softstar Entertainment and Chi Sheng.
Diversification Opportunities for Softstar Entertainment and Chi Sheng
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Softstar and Chi is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Softstar Entertainment and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical and Softstar Entertainment 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 Softstar Entertainment are associated (or correlated) with Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of Softstar Entertainment i.e., Softstar Entertainment and Chi Sheng go up and down completely randomly.
Pair Corralation between Softstar Entertainment and Chi Sheng
Assuming the 90 days trading horizon Softstar Entertainment is expected to generate 1.65 times more return on investment than Chi Sheng. However, Softstar Entertainment is 1.65 times more volatile than Chi Sheng Chemical. It trades about 0.01 of its potential returns per unit of risk. Chi Sheng Chemical is currently generating about 0.01 per unit of risk. If you would invest 6,310 in Softstar Entertainment on October 28, 2024 and sell it today you would lose (510.00) from holding Softstar Entertainment or give up 8.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softstar Entertainment vs. Chi Sheng Chemical
Performance |
| Timeline |
| Softstar Entertainment |
| Chi Sheng Chemical |
Softstar Entertainment and Chi Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softstar Entertainment and Chi Sheng
The main advantage of trading using opposite Softstar Entertainment and Chi Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softstar Entertainment position performs unexpectedly, Chi Sheng 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 Chi Sheng will offset losses from the drop in Chi Sheng's long position.The idea behind Softstar Entertainment and Chi Sheng Chemical 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.
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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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