Correlation Between Arima Communications and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both Arima Communications and Chun Yuan 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 Arima Communications and Chun Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arima Communications Corp and Chun Yuan Steel, you can compare the effects of market volatilities on Arima Communications and Chun Yuan 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 Arima Communications with a short position of Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arima Communications and Chun Yuan.
Diversification Opportunities for Arima Communications and Chun Yuan
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arima and Chun is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Arima Communications Corp and Chun Yuan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chun Yuan Steel and Arima Communications 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 Arima Communications Corp are associated (or correlated) with Chun Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chun Yuan Steel has no effect on the direction of Arima Communications i.e., Arima Communications and Chun Yuan go up and down completely randomly.
Pair Corralation between Arima Communications and Chun Yuan
Assuming the 90 days trading horizon Arima Communications Corp is expected to under-perform the Chun Yuan. In addition to that, Arima Communications is 4.82 times more volatile than Chun Yuan Steel. It trades about -0.07 of its total potential returns per unit of risk. Chun Yuan Steel is currently generating about -0.15 per unit of volatility. If you would invest 1,815 in Chun Yuan Steel on October 22, 2024 and sell it today you would lose (40.00) from holding Chun Yuan Steel or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Arima Communications Corp vs. Chun Yuan Steel
Performance |
| Timeline |
| Arima Communications Corp |
| Chun Yuan Steel |
Arima Communications and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arima Communications and Chun Yuan
The main advantage of trading using opposite Arima Communications and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arima Communications position performs unexpectedly, Chun Yuan 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 Chun Yuan will offset losses from the drop in Chun Yuan's long position.| Arima Communications vs. Silitech Technology Corp | Arima Communications vs. Merry Electronics Co | Arima Communications vs. Cheng Uei Precision | Arima Communications vs. Wistron NeWeb Corp |
| Chun Yuan vs. Hsin Kuang Steel | Chun Yuan vs. Chung Hung Steel | Chun Yuan vs. China Steel Structure | Chun Yuan vs. Feng Hsin Steel |
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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