Correlation Between Cleanaway and Chong Hong
Can any of the company-specific risk be diversified away by investing in both Cleanaway and Chong Hong 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 Cleanaway and Chong Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleanaway Co and Chong Hong Construction, you can compare the effects of market volatilities on Cleanaway and Chong Hong 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 Cleanaway with a short position of Chong Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleanaway and Chong Hong.
Diversification Opportunities for Cleanaway and Chong Hong
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cleanaway and Chong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Co and Chong Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chong Hong Construction and Cleanaway 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 Cleanaway Co are associated (or correlated) with Chong Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chong Hong Construction has no effect on the direction of Cleanaway i.e., Cleanaway and Chong Hong go up and down completely randomly.
Pair Corralation between Cleanaway and Chong Hong
Assuming the 90 days trading horizon Cleanaway is expected to generate 8.46 times less return on investment than Chong Hong. But when comparing it to its historical volatility, Cleanaway Co is 2.28 times less risky than Chong Hong. It trades about 0.01 of its potential returns per unit of risk. Chong Hong Construction is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,150 in Chong Hong Construction on August 29, 2024 and sell it today you would earn a total of 1,530 from holding Chong Hong Construction or generate 21.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cleanaway Co vs. Chong Hong Construction
Performance |
| Timeline |
| Cleanaway |
| Chong Hong Construction |
Cleanaway and Chong Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cleanaway and Chong Hong
The main advantage of trading using opposite Cleanaway and Chong Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleanaway position performs unexpectedly, Chong Hong 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 Chong Hong will offset losses from the drop in Chong Hong's long position.| Cleanaway vs. Yulon Motor Co | Cleanaway vs. Far Eastern Department | Cleanaway vs. China Steel Corp | Cleanaway vs. Chang Hwa Commercial |
| Chong Hong vs. Tainan Spinning Co | Chong Hong vs. Carnival Industrial Corp | Chong Hong vs. Symtek Automation Asia | Chong Hong vs. CTCI 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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