Correlation Between Fulgent Sun and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Fulgent Sun 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 Fulgent Sun and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulgent Sun International and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Fulgent Sun 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 Fulgent Sun with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulgent Sun and Chung Hsin.
Diversification Opportunities for Fulgent Sun and Chung Hsin
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fulgent and Chung is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fulgent Sun International 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 Fulgent Sun 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 Fulgent Sun International 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 Fulgent Sun i.e., Fulgent Sun and Chung Hsin go up and down completely randomly.
Pair Corralation between Fulgent Sun and Chung Hsin
Assuming the 90 days trading horizon Fulgent Sun International is expected to under-perform the Chung Hsin. But the stock apears to be less risky and, when comparing its historical volatility, Fulgent Sun International is 1.52 times less risky than Chung Hsin. The stock trades about -0.02 of its potential returns per unit of risk. The Chung Hsin Electric Machinery is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11,050 in Chung Hsin Electric Machinery on August 29, 2024 and sell it today you would earn a total of 5,050 from holding Chung Hsin Electric Machinery or generate 45.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fulgent Sun International vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| Fulgent Sun International |
| Chung Hsin Electric |
Fulgent Sun and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulgent Sun and Chung Hsin
The main advantage of trading using opposite Fulgent Sun and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulgent Sun 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.| Fulgent Sun vs. Feng Tay Enterprises | Fulgent Sun vs. Pou Chen Corp | Fulgent Sun vs. Taiwan Paiho | Fulgent Sun vs. Merida Industry Co |
| Chung Hsin vs. Yulon Motor Co | Chung Hsin vs. Far Eastern Department | Chung Hsin vs. China Steel Corp | Chung Hsin vs. Chang Hwa Commercial |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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