Correlation Between Simplo Technology and Chong Hong
Can any of the company-specific risk be diversified away by investing in both Simplo Technology and Chong Hong 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 Simplo Technology and Chong Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplo Technology Co and Chong Hong Construction, you can compare the effects of market volatilities on Simplo Technology and Chong Hong 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 Simplo Technology with a short position of Chong Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplo Technology and Chong Hong.
Diversification Opportunities for Simplo Technology and Chong Hong
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Simplo and Chong is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Simplo Technology Co and Chong Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chong Hong Construction and Simplo Technology 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 Simplo Technology Co are associated (or correlated) with Chong Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chong Hong Construction has no effect on the direction of Simplo Technology i.e., Simplo Technology and Chong Hong go up and down completely randomly.
Pair Corralation between Simplo Technology and Chong Hong
Assuming the 90 days trading horizon Simplo Technology Co is expected to under-perform the Chong Hong. But the stock apears to be less risky and, when comparing its historical volatility, Simplo Technology Co is 1.54 times less risky than Chong Hong. The stock trades about -0.03 of its potential returns per unit of risk. The Chong Hong Construction is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9,260 in Chong Hong Construction on September 3, 2024 and sell it today you would lose (310.00) from holding Chong Hong Construction or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplo Technology Co vs. Chong Hong Construction
Performance |
| Timeline |
| Simplo Technology |
| Chong Hong Construction |
Simplo Technology and Chong Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplo Technology and Chong Hong
The main advantage of trading using opposite Simplo Technology and Chong Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplo Technology position performs unexpectedly, Chong Hong 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 Chong Hong will offset losses from the drop in Chong Hong's long position.| Simplo Technology vs. Eclat Textile Co | Simplo Technology vs. WiseChip Semiconductor | Simplo Technology vs. Novatek Microelectronics Corp | Simplo Technology vs. Leader Electronics |
| Chong Hong vs. Huaku Development Co | Chong Hong vs. Ruentex Development Co | Chong Hong vs. Taiwan Cement Corp | Chong Hong vs. Symtek Automation Asia |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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