Correlation Between Alar Pharmaceuticals and Ching Feng
Can any of the company-specific risk be diversified away by investing in both Alar Pharmaceuticals 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 Alar Pharmaceuticals and Ching Feng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alar Pharmaceuticals and Ching Feng Home, you can compare the effects of market volatilities on Alar Pharmaceuticals 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 Alar Pharmaceuticals with a short position of Ching Feng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alar Pharmaceuticals and Ching Feng.
Diversification Opportunities for Alar Pharmaceuticals and Ching Feng
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alar and Ching is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alar Pharmaceuticals 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 Alar Pharmaceuticals 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 Alar Pharmaceuticals 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 Alar Pharmaceuticals i.e., Alar Pharmaceuticals and Ching Feng go up and down completely randomly.
Pair Corralation between Alar Pharmaceuticals and Ching Feng
Assuming the 90 days trading horizon Alar Pharmaceuticals is expected to generate 1.07 times more return on investment than Ching Feng. However, Alar Pharmaceuticals is 1.07 times more volatile than Ching Feng Home. It trades about -0.05 of its potential returns per unit of risk. Ching Feng Home is currently generating about -0.14 per unit of risk. If you would invest 16,600 in Alar Pharmaceuticals on September 1, 2024 and sell it today you would lose (600.00) from holding Alar Pharmaceuticals or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alar Pharmaceuticals vs. Ching Feng Home
Performance |
| Timeline |
| Alar Pharmaceuticals |
| Ching Feng Home |
Alar Pharmaceuticals and Ching Feng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alar Pharmaceuticals and Ching Feng
The main advantage of trading using opposite Alar Pharmaceuticals and Ching Feng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alar Pharmaceuticals 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.The idea behind Alar Pharmaceuticals and Ching Feng Home 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.| Ching Feng vs. Chaintech Technology Corp | Ching Feng vs. AVerMedia Technologies | Ching Feng vs. Avision | Ching Feng vs. Clevo 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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