Correlation Between Ching Feng and MedFirst Healthcare
Can any of the company-specific risk be diversified away by investing in both Ching Feng and MedFirst Healthcare 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 Ching Feng and MedFirst Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ching Feng Home and MedFirst Healthcare Services, you can compare the effects of market volatilities on Ching Feng and MedFirst Healthcare 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 Ching Feng with a short position of MedFirst Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ching Feng and MedFirst Healthcare.
Diversification Opportunities for Ching Feng and MedFirst Healthcare
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ching and MedFirst is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ching Feng Home and MedFirst Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedFirst Healthcare and Ching Feng 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 Ching Feng Home are associated (or correlated) with MedFirst Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedFirst Healthcare has no effect on the direction of Ching Feng i.e., Ching Feng and MedFirst Healthcare go up and down completely randomly.
Pair Corralation between Ching Feng and MedFirst Healthcare
Assuming the 90 days trading horizon Ching Feng Home is expected to generate 2.69 times more return on investment than MedFirst Healthcare. However, Ching Feng is 2.69 times more volatile than MedFirst Healthcare Services. It trades about 0.1 of its potential returns per unit of risk. MedFirst Healthcare Services is currently generating about -0.08 per unit of risk. If you would invest 2,135 in Ching Feng Home on September 3, 2024 and sell it today you would earn a total of 955.00 from holding Ching Feng Home or generate 44.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ching Feng Home vs. MedFirst Healthcare Services
Performance |
| Timeline |
| Ching Feng Home |
| MedFirst Healthcare |
Ching Feng and MedFirst Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ching Feng and MedFirst Healthcare
The main advantage of trading using opposite Ching Feng and MedFirst Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ching Feng position performs unexpectedly, MedFirst Healthcare 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 MedFirst Healthcare will offset losses from the drop in MedFirst Healthcare's long position.| Ching Feng vs. Tainan Spinning Co | Ching Feng vs. Chia Her Industrial | Ching Feng vs. WiseChip Semiconductor | Ching Feng vs. Novatek Microelectronics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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