Correlation Between Trade Van and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Trade Van and Chung Hwa 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 Trade Van and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trade Van Information Services and Chung Hwa Food, you can compare the effects of market volatilities on Trade Van and Chung Hwa 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 Trade Van with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Van and Chung Hwa.
Diversification Opportunities for Trade Van and Chung Hwa
Pay attention - limited upside
The 3 months correlation between Trade and Chung is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Trade Van Information Services and Chung Hwa Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Food and Trade Van 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 Trade Van Information Services are associated (or correlated) with Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Food has no effect on the direction of Trade Van i.e., Trade Van and Chung Hwa go up and down completely randomly.
Pair Corralation between Trade Van and Chung Hwa
Assuming the 90 days trading horizon Trade Van Information Services is expected to generate 4.01 times more return on investment than Chung Hwa. However, Trade Van is 4.01 times more volatile than Chung Hwa Food. It trades about 0.35 of its potential returns per unit of risk. Chung Hwa Food is currently generating about -0.25 per unit of risk. If you would invest 8,370 in Trade Van Information Services on October 25, 2024 and sell it today you would earn a total of 890.00 from holding Trade Van Information Services or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trade Van Information Services vs. Chung Hwa Food
Performance |
| Timeline |
| Trade Van Information |
| Chung Hwa Food |
Trade Van and Chung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Van and Chung Hwa
The main advantage of trading using opposite Trade Van and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Van position performs unexpectedly, Chung Hwa 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 Chung Hwa will offset losses from the drop in Chung Hwa's long position.| Trade Van vs. Taiwan Sakura Corp | Trade Van vs. Charoen Pokphand Enterprise | Trade Van vs. Taiwan Cogeneration Corp | Trade Van vs. Taiwan Secom Co |
| Chung Hwa vs. Uni President Enterprises Corp | Chung Hwa vs. Tingyi Holding Corp | Chung Hwa vs. Lien Hwa Industrial | Chung Hwa vs. Great Wall Enterprise |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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