Correlation Between CHO Pharma and Asustek Computer
Can any of the company-specific risk be diversified away by investing in both CHO Pharma and Asustek Computer 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 CHO Pharma and Asustek Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHO Pharma and Asustek Computer, you can compare the effects of market volatilities on CHO Pharma and Asustek Computer 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 CHO Pharma with a short position of Asustek Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHO Pharma and Asustek Computer.
Diversification Opportunities for CHO Pharma and Asustek Computer
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CHO and Asustek is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CHO Pharma and Asustek Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asustek Computer and CHO Pharma 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 CHO Pharma are associated (or correlated) with Asustek Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asustek Computer has no effect on the direction of CHO Pharma i.e., CHO Pharma and Asustek Computer go up and down completely randomly.
Pair Corralation between CHO Pharma and Asustek Computer
Assuming the 90 days trading horizon CHO Pharma is expected to generate 1.71 times more return on investment than Asustek Computer. However, CHO Pharma is 1.71 times more volatile than Asustek Computer. It trades about 0.04 of its potential returns per unit of risk. Asustek Computer is currently generating about -0.03 per unit of risk. If you would invest 5,290 in CHO Pharma on September 15, 2024 and sell it today you would earn a total of 90.00 from holding CHO Pharma or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHO Pharma vs. Asustek Computer
Performance |
| Timeline |
| CHO Pharma |
| Asustek Computer |
CHO Pharma and Asustek Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHO Pharma and Asustek Computer
The main advantage of trading using opposite CHO Pharma and Asustek Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHO Pharma position performs unexpectedly, Asustek Computer 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 Asustek Computer will offset losses from the drop in Asustek Computer's long position.| CHO Pharma vs. Asustek Computer | CHO Pharma vs. Cameo Communications | CHO Pharma vs. Tainet Communication System | CHO Pharma vs. Emerging Display Technologies |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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