Correlation Between Chunghwa Precision and Chipbond Technology
Can any of the company-specific risk be diversified away by investing in both Chunghwa Precision and Chipbond 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 Chipbond 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 Chipbond Technology, you can compare the effects of market volatilities on Chunghwa Precision and Chipbond 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 Chipbond Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Precision and Chipbond Technology.
Diversification Opportunities for Chunghwa Precision and Chipbond Technology
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chunghwa and Chipbond is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Precision Test and Chipbond Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipbond 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 Chipbond Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipbond Technology has no effect on the direction of Chunghwa Precision i.e., Chunghwa Precision and Chipbond Technology go up and down completely randomly.
Pair Corralation between Chunghwa Precision and Chipbond Technology
Assuming the 90 days trading horizon Chunghwa Precision Test is expected to generate 3.01 times more return on investment than Chipbond Technology. However, Chunghwa Precision is 3.01 times more volatile than Chipbond Technology. It trades about 0.35 of its potential returns per unit of risk. Chipbond Technology is currently generating about 0.11 per unit of risk. If you would invest 53,800 in Chunghwa Precision Test on August 29, 2024 and sell it today you would earn a total of 16,800 from holding Chunghwa Precision Test or generate 31.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chunghwa Precision Test vs. Chipbond Technology
Performance |
| Timeline |
| Chunghwa Precision Test |
| Chipbond Technology |
Chunghwa Precision and Chipbond Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Precision and Chipbond Technology
The main advantage of trading using opposite Chunghwa Precision and Chipbond Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Precision position performs unexpectedly, Chipbond 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 Chipbond Technology will offset losses from the drop in Chipbond Technology's long position.| Chunghwa Precision vs. Hon Hai Precision | Chunghwa Precision vs. Delta Electronics | Chunghwa Precision vs. LARGAN Precision Co | Chunghwa Precision vs. E Ink Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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