Correlation Between Darfon Electronics and Cheng Uei
Can any of the company-specific risk be diversified away by investing in both Darfon Electronics 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 Darfon Electronics and Cheng Uei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darfon Electronics Corp and Cheng Uei Precision, you can compare the effects of market volatilities on Darfon Electronics 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 Darfon Electronics with a short position of Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darfon Electronics and Cheng Uei.
Diversification Opportunities for Darfon Electronics and Cheng Uei
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Darfon and Cheng is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Darfon Electronics 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 Darfon Electronics 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 Darfon Electronics 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 Darfon Electronics i.e., Darfon Electronics and Cheng Uei go up and down completely randomly.
Pair Corralation between Darfon Electronics and Cheng Uei
Assuming the 90 days trading horizon Darfon Electronics Corp is expected to generate 0.87 times more return on investment than Cheng Uei. However, Darfon Electronics Corp is 1.15 times less risky than Cheng Uei. It trades about -0.01 of its potential returns per unit of risk. Cheng Uei Precision is currently generating about -0.2 per unit of risk. If you would invest 4,395 in Darfon Electronics Corp on October 26, 2024 and sell it today you would lose (25.00) from holding Darfon Electronics Corp or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darfon Electronics Corp vs. Cheng Uei Precision
Performance |
| Timeline |
| Darfon Electronics Corp |
| Cheng Uei Precision |
Darfon Electronics and Cheng Uei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darfon Electronics and Cheng Uei
The main advantage of trading using opposite Darfon Electronics and Cheng Uei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darfon Electronics 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.| Darfon Electronics vs. Cheng Uei Precision | Darfon Electronics vs. Acbel Polytech | Darfon Electronics vs. Inventec Corp | Darfon Electronics vs. Clevo Co |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |