Correlation Between Kaori Heat and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Kaori Heat and Chung Hsin 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 Kaori Heat and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaori Heat Treatment and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Kaori Heat and Chung Hsin 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 Kaori Heat with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaori Heat and Chung Hsin.
Diversification Opportunities for Kaori Heat and Chung Hsin
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaori and Chung is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kaori Heat Treatment and Chung Hsin Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hsin Electric and Kaori Heat 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 Kaori Heat Treatment are associated (or correlated) with Chung Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hsin Electric has no effect on the direction of Kaori Heat i.e., Kaori Heat and Chung Hsin go up and down completely randomly.
Pair Corralation between Kaori Heat and Chung Hsin
Assuming the 90 days trading horizon Kaori Heat Treatment is expected to generate 2.13 times more return on investment than Chung Hsin. However, Kaori Heat is 2.13 times more volatile than Chung Hsin Electric Machinery. It trades about 0.17 of its potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about -0.04 per unit of risk. If you would invest 30,950 in Kaori Heat Treatment on September 4, 2024 and sell it today you would earn a total of 4,350 from holding Kaori Heat Treatment or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaori Heat Treatment vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| Kaori Heat Treatment |
| Chung Hsin Electric |
Kaori Heat and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaori Heat and Chung Hsin
The main advantage of trading using opposite Kaori Heat and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaori Heat position performs unexpectedly, Chung Hsin 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 Chung Hsin will offset losses from the drop in Chung Hsin's long position.| Kaori Heat vs. Chung Hsin Electric Machinery | Kaori Heat vs. TECO Electric Machinery | Kaori Heat vs. Allis Electric Co | Kaori Heat vs. BenQ Materials Corp |
| Chung Hsin vs. TECO Electric Machinery | Chung Hsin vs. Fortune Electric Co | Chung Hsin vs. Taiwan Cement Corp | Chung Hsin vs. Walsin Lihwa 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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