Correlation Between Arima Communications and Cheng Uei
Can any of the company-specific risk be diversified away by investing in both Arima Communications and Cheng Uei 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 Cheng Uei 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 Cheng Uei Precision, you can compare the effects of market volatilities on Arima Communications and Cheng Uei 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 Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arima Communications and Cheng Uei.
Diversification Opportunities for Arima Communications and Cheng Uei
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Arima and Cheng is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Arima Communications Corp and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision 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 Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of Arima Communications i.e., Arima Communications and Cheng Uei go up and down completely randomly.
Pair Corralation between Arima Communications and Cheng Uei
Assuming the 90 days trading horizon Arima Communications Corp is expected to generate 1.03 times more return on investment than Cheng Uei. However, Arima Communications is 1.03 times more volatile than Cheng Uei Precision. It trades about 0.6 of its potential returns per unit of risk. Cheng Uei Precision is currently generating about 0.39 per unit of risk. If you would invest 950.00 in Arima Communications Corp on August 29, 2024 and sell it today you would earn a total of 715.00 from holding Arima Communications Corp or generate 75.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arima Communications Corp vs. Cheng Uei Precision
Performance |
| Timeline |
| Arima Communications Corp |
| Cheng Uei Precision |
Arima Communications and Cheng Uei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arima Communications and Cheng Uei
The main advantage of trading using opposite Arima Communications and Cheng Uei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arima Communications position performs unexpectedly, Cheng Uei 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 Cheng Uei will offset losses from the drop in Cheng Uei'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 |
| Cheng Uei vs. Inventec Corp | Cheng Uei vs. Compal Electronics | Cheng Uei vs. Ichia Technologies | Cheng Uei vs. Pan International Industrial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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