Correlation Between China Times and Huang Hsiang
Can any of the company-specific risk be diversified away by investing in both China Times and Huang Hsiang 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 China Times and Huang Hsiang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Times Publishing and Huang Hsiang Construction, you can compare the effects of market volatilities on China Times and Huang Hsiang 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 China Times with a short position of Huang Hsiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Times and Huang Hsiang.
Diversification Opportunities for China Times and Huang Hsiang
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Huang is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Times Publishing and Huang Hsiang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huang Hsiang Construction and China Times 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 China Times Publishing are associated (or correlated) with Huang Hsiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huang Hsiang Construction has no effect on the direction of China Times i.e., China Times and Huang Hsiang go up and down completely randomly.
Pair Corralation between China Times and Huang Hsiang
Assuming the 90 days trading horizon China Times Publishing is expected to generate 1.14 times more return on investment than Huang Hsiang. However, China Times is 1.14 times more volatile than Huang Hsiang Construction. It trades about 0.13 of its potential returns per unit of risk. Huang Hsiang Construction is currently generating about 0.0 per unit of risk. If you would invest 1,780 in China Times Publishing on September 13, 2024 and sell it today you would earn a total of 180.00 from holding China Times Publishing or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Times Publishing vs. Huang Hsiang Construction
Performance |
| Timeline |
| China Times Publishing |
| Huang Hsiang Construction |
China Times and Huang Hsiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Times and Huang Hsiang
The main advantage of trading using opposite China Times and Huang Hsiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Times position performs unexpectedly, Huang Hsiang 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 Huang Hsiang will offset losses from the drop in Huang Hsiang's long position.| China Times vs. YuantaP shares Taiwan Top | China Times vs. YuantaP shares Taiwan Electronics | China Times vs. Fubon MSCI Taiwan | China Times vs. YuantaP shares Taiwan Mid Cap |
| Huang Hsiang vs. Chong Hong Construction | Huang Hsiang vs. Ruentex Development Co | Huang Hsiang vs. Symtek Automation Asia | Huang Hsiang vs. WiseChip Semiconductor |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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