Correlation Between Sun Max and Chung Fu
Can any of the company-specific risk be diversified away by investing in both Sun Max and Chung Fu 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 Chung Fu 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 Chung Fu Tex International, you can compare the effects of market volatilities on Sun Max and Chung Fu 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 Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Max and Chung Fu.
Diversification Opportunities for Sun Max and Chung Fu
Very good diversification
The 3 months correlation between Sun and Chung is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sun Max Tech and Chung Fu Tex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Fu Tex 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 Chung Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Fu Tex has no effect on the direction of Sun Max i.e., Sun Max and Chung Fu go up and down completely randomly.
Pair Corralation between Sun Max and Chung Fu
Assuming the 90 days trading horizon Sun Max is expected to generate 4.3 times less return on investment than Chung Fu. But when comparing it to its historical volatility, Sun Max Tech is 1.51 times less risky than Chung Fu. It trades about 0.02 of its potential returns per unit of risk. Chung Fu Tex International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,630 in Chung Fu Tex International on September 2, 2024 and sell it today you would earn a total of 1,365 from holding Chung Fu Tex International or generate 51.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Max Tech vs. Chung Fu Tex International
Performance |
| Timeline |
| Sun Max Tech |
| Chung Fu Tex |
Sun Max and Chung Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Max and Chung Fu
The main advantage of trading using opposite Sun Max and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Max position performs unexpectedly, Chung Fu 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 Fu will offset losses from the drop in Chung Fu's long position.The idea behind Sun Max Tech and Chung Fu Tex International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Chung Fu vs. Ablerex Electronics Co | Chung Fu vs. AVerMedia Technologies | Chung Fu vs. C Media Electronics | Chung Fu vs. Universal Microelectronics Co |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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