Correlation Between CHC Resources and Thye Ming
Can any of the company-specific risk be diversified away by investing in both CHC Resources and Thye Ming 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 CHC Resources and Thye Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Resources Corp and Thye Ming Industrial, you can compare the effects of market volatilities on CHC Resources and Thye Ming 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 CHC Resources with a short position of Thye Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Resources and Thye Ming.
Diversification Opportunities for CHC Resources and Thye Ming
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CHC and Thye is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CHC Resources Corp and Thye Ming Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thye Ming Industrial and CHC Resources 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 CHC Resources Corp are associated (or correlated) with Thye Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thye Ming Industrial has no effect on the direction of CHC Resources i.e., CHC Resources and Thye Ming go up and down completely randomly.
Pair Corralation between CHC Resources and Thye Ming
Assuming the 90 days trading horizon CHC Resources Corp is expected to generate 1.1 times more return on investment than Thye Ming. However, CHC Resources is 1.1 times more volatile than Thye Ming Industrial. It trades about 0.46 of its potential returns per unit of risk. Thye Ming Industrial is currently generating about 0.4 per unit of risk. If you would invest 6,800 in CHC Resources Corp on December 11, 2024 and sell it today you would earn a total of 370.00 from holding CHC Resources Corp or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Resources Corp vs. Thye Ming Industrial
Performance |
| Timeline |
| CHC Resources Corp |
| Thye Ming Industrial |
CHC Resources and Thye Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Resources and Thye Ming
The main advantage of trading using opposite CHC Resources and Thye Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Resources position performs unexpectedly, Thye Ming 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 Thye Ming will offset losses from the drop in Thye Ming's long position.| CHC Resources vs. China Steel Chemical | CHC Resources vs. Taiwan Secom Co | CHC Resources vs. Nak Sealing Technologies | CHC Resources vs. Sinyi Realty |
| Thye Ming vs. CHC Resources Corp | Thye Ming vs. Taiwan Shin Kong | Thye Ming vs. Taiwan Secom Co | Thye Ming vs. Nak Sealing Technologies |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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