Correlation Between ECOVE Environment and Chung Fu
Can any of the company-specific risk be diversified away by investing in both ECOVE Environment 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 ECOVE Environment and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECOVE Environment Corp and Chung Fu Tex International, you can compare the effects of market volatilities on ECOVE Environment 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 ECOVE Environment with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECOVE Environment and Chung Fu.
Diversification Opportunities for ECOVE Environment and Chung Fu
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ECOVE and Chung is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ECOVE Environment Corp 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 ECOVE Environment 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 ECOVE Environment Corp 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 ECOVE Environment i.e., ECOVE Environment and Chung Fu go up and down completely randomly.
Pair Corralation between ECOVE Environment and Chung Fu
Assuming the 90 days trading horizon ECOVE Environment Corp is expected to generate 0.2 times more return on investment than Chung Fu. However, ECOVE Environment Corp is 4.93 times less risky than Chung Fu. It trades about 0.03 of its potential returns per unit of risk. Chung Fu Tex International is currently generating about -0.04 per unit of risk. If you would invest 29,093 in ECOVE Environment Corp on December 2, 2024 and sell it today you would earn a total of 1,257 from holding ECOVE Environment Corp or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECOVE Environment Corp vs. Chung Fu Tex International
Performance |
| Timeline |
| ECOVE Environment Corp |
| Chung Fu Tex |
ECOVE Environment and Chung Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECOVE Environment and Chung Fu
The main advantage of trading using opposite ECOVE Environment and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECOVE Environment 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.| ECOVE Environment vs. Cleanaway Co | ECOVE Environment vs. Taiwan Secom Co | ECOVE Environment vs. Sunny Friend Environmental | ECOVE Environment vs. TTET Union Corp |
| Chung Fu vs. Da Cin Construction Co | Chung Fu vs. Asmedia Technology | Chung Fu vs. China Construction Bank | Chung Fu vs. Lian Hwa Foods |
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 Stocks Directory module to find actively traded stocks across global markets.
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