Correlation Between Chunghwa Precision and Etron Technology
Can any of the company-specific risk be diversified away by investing in both Chunghwa Precision and Etron Technology 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 Chunghwa Precision and Etron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunghwa Precision Test and Etron Technology, you can compare the effects of market volatilities on Chunghwa Precision and Etron Technology 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 Chunghwa Precision with a short position of Etron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Precision and Etron Technology.
Diversification Opportunities for Chunghwa Precision and Etron Technology
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chunghwa and Etron is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Precision Test and Etron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etron Technology and Chunghwa Precision 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 Chunghwa Precision Test are associated (or correlated) with Etron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etron Technology has no effect on the direction of Chunghwa Precision i.e., Chunghwa Precision and Etron Technology go up and down completely randomly.
Pair Corralation between Chunghwa Precision and Etron Technology
Assuming the 90 days trading horizon Chunghwa Precision Test is expected to generate 1.69 times more return on investment than Etron Technology. However, Chunghwa Precision is 1.69 times more volatile than Etron Technology. It trades about -0.03 of its potential returns per unit of risk. Etron Technology is currently generating about -0.19 per unit of risk. If you would invest 84,700 in Chunghwa Precision Test on October 20, 2024 and sell it today you would lose (3,200) from holding Chunghwa Precision Test or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Precision Test vs. Etron Technology
Performance |
| Timeline |
| Chunghwa Precision Test |
| Etron Technology |
Chunghwa Precision and Etron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Precision and Etron Technology
The main advantage of trading using opposite Chunghwa Precision and Etron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Precision position performs unexpectedly, Etron Technology 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 Etron Technology will offset losses from the drop in Etron Technology's long position.| Chunghwa Precision vs. K Way Information | Chunghwa Precision vs. Chernan Metal Industrial | Chunghwa Precision vs. Information Technology Total | Chunghwa Precision vs. Lien Chang Electronic |
| Etron Technology vs. Sunplus Technology Co | Etron Technology vs. Realtek Semiconductor Corp | Etron Technology vs. Winbond Electronics Corp | Etron Technology vs. VIA Technologies |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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