Correlation Between Sun Max and Hung Chou
Can any of the company-specific risk be diversified away by investing in both Sun Max and Hung Chou 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 Sun Max and Hung Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Max Tech and Hung Chou Fiber, you can compare the effects of market volatilities on Sun Max and Hung Chou 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 Sun Max with a short position of Hung Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Max and Hung Chou.
Diversification Opportunities for Sun Max and Hung Chou
Very weak diversification
The 3 months correlation between Sun and Hung is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and Hung Chou Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Chou Fiber and Sun Max 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 Sun Max Tech are associated (or correlated) with Hung Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Chou Fiber has no effect on the direction of Sun Max i.e., Sun Max and Hung Chou go up and down completely randomly.
Pair Corralation between Sun Max and Hung Chou
Assuming the 90 days trading horizon Sun Max is expected to generate 2.3 times less return on investment than Hung Chou. In addition to that, Sun Max is 1.26 times more volatile than Hung Chou Fiber. It trades about 0.03 of its total potential returns per unit of risk. Hung Chou Fiber is currently generating about 0.08 per unit of volatility. If you would invest 835.00 in Hung Chou Fiber on September 14, 2024 and sell it today you would earn a total of 330.00 from holding Hung Chou Fiber or generate 39.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Max Tech vs. Hung Chou Fiber
Performance |
| Timeline |
| Sun Max Tech |
| Hung Chou Fiber |
Sun Max and Hung Chou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Max and Hung Chou
The main advantage of trading using opposite Sun Max and Hung Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Max position performs unexpectedly, Hung Chou 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 Hung Chou will offset losses from the drop in Hung Chou's long position.| Sun Max vs. Qisda Corp | Sun Max vs. Quanta Computer | Sun Max vs. Wistron Corp | Sun Max vs. Delta Electronics |
| Hung Chou vs. Feng Tay Enterprises | Hung Chou vs. Ruentex Development Co | Hung Chou vs. WiseChip Semiconductor | Hung Chou vs. Novatek Microelectronics Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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