Correlation Between Ching Feng and Asmedia Technology
Can any of the company-specific risk be diversified away by investing in both Ching Feng and Asmedia Technology 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 Asmedia Technology 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 Asmedia Technology, you can compare the effects of market volatilities on Ching Feng and Asmedia Technology 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 Asmedia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ching Feng and Asmedia Technology.
Diversification Opportunities for Ching Feng and Asmedia Technology
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ching and Asmedia is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ching Feng Home and Asmedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asmedia Technology 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 Asmedia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asmedia Technology has no effect on the direction of Ching Feng i.e., Ching Feng and Asmedia Technology go up and down completely randomly.
Pair Corralation between Ching Feng and Asmedia Technology
Assuming the 90 days trading horizon Ching Feng is expected to generate 1.75 times less return on investment than Asmedia Technology. But when comparing it to its historical volatility, Ching Feng Home is 1.74 times less risky than Asmedia Technology. It trades about 0.07 of its potential returns per unit of risk. Asmedia Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 68,674 in Asmedia Technology on September 3, 2024 and sell it today you would earn a total of 92,826 from holding Asmedia Technology or generate 135.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ching Feng Home vs. Asmedia Technology
Performance |
| Timeline |
| Ching Feng Home |
| Asmedia Technology |
Ching Feng and Asmedia Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ching Feng and Asmedia Technology
The main advantage of trading using opposite Ching Feng and Asmedia Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ching Feng position performs unexpectedly, Asmedia Technology 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 Asmedia Technology will offset losses from the drop in Asmedia Technology'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 |
| Asmedia Technology vs. Taiwan Semiconductor Manufacturing | Asmedia Technology vs. Yang Ming Marine | Asmedia Technology vs. ASE Industrial Holding | Asmedia Technology vs. AU Optronics |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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