Correlation Between Asia Metal and Ching Feng
Can any of the company-specific risk be diversified away by investing in both Asia Metal and Ching Feng 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 Asia Metal and Ching Feng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Metal Industries and Ching Feng Home, you can compare the effects of market volatilities on Asia Metal and Ching Feng 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 Asia Metal with a short position of Ching Feng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Ching Feng.
Diversification Opportunities for Asia Metal and Ching Feng
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asia and Ching is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Industries and Ching Feng Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ching Feng Home and Asia Metal 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 Asia Metal Industries are associated (or correlated) with Ching Feng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ching Feng Home has no effect on the direction of Asia Metal i.e., Asia Metal and Ching Feng go up and down completely randomly.
Pair Corralation between Asia Metal and Ching Feng
Assuming the 90 days trading horizon Asia Metal Industries is expected to generate 0.9 times more return on investment than Ching Feng. However, Asia Metal Industries is 1.11 times less risky than Ching Feng. It trades about 0.12 of its potential returns per unit of risk. Ching Feng Home is currently generating about 0.1 per unit of risk. If you would invest 5,750 in Asia Metal Industries on September 3, 2024 and sell it today you would earn a total of 3,050 from holding Asia Metal Industries or generate 53.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Metal Industries vs. Ching Feng Home
Performance |
| Timeline |
| Asia Metal Industries |
| Ching Feng Home |
Asia Metal and Ching Feng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Metal and Ching Feng
The main advantage of trading using opposite Asia Metal and Ching Feng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Metal position performs unexpectedly, Ching Feng 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 Ching Feng will offset losses from the drop in Ching Feng's long position.| Asia Metal vs. Highlight Tech | Asia Metal vs. WiseChip Semiconductor | Asia Metal vs. Novatek Microelectronics Corp | Asia Metal vs. Leader Electronics |
| Ching Feng vs. Tainan Spinning Co | Ching Feng vs. Chia Her Industrial | Ching Feng vs. WiseChip Semiconductor | Ching Feng 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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