Correlation Between Ching Feng and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Ching Feng and Sunny Friend 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 Sunny Friend 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 Sunny Friend Environmental, you can compare the effects of market volatilities on Ching Feng and Sunny Friend 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 Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ching Feng and Sunny Friend.
Diversification Opportunities for Ching Feng and Sunny Friend
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ching and Sunny is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ching Feng Home and Sunny Friend Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Friend Environ 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 Sunny Friend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Friend Environ has no effect on the direction of Ching Feng i.e., Ching Feng and Sunny Friend go up and down completely randomly.
Pair Corralation between Ching Feng and Sunny Friend
Assuming the 90 days trading horizon Ching Feng Home is expected to generate 1.39 times more return on investment than Sunny Friend. However, Ching Feng is 1.39 times more volatile than Sunny Friend Environmental. It trades about 0.07 of its potential returns per unit of risk. Sunny Friend Environmental is currently generating about -0.07 per unit of risk. If you would invest 1,935 in Ching Feng Home on September 2, 2024 and sell it today you would earn a total of 1,155 from holding Ching Feng Home or generate 59.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ching Feng Home vs. Sunny Friend Environmental
Performance |
| Timeline |
| Ching Feng Home |
| Sunny Friend Environ |
Ching Feng and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ching Feng and Sunny Friend
The main advantage of trading using opposite Ching Feng and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ching Feng position performs unexpectedly, Sunny Friend 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 Sunny Friend will offset losses from the drop in Sunny Friend's long position.| Ching Feng vs. Taiwan Fu Hsing | Ching Feng vs. Taiwan Hon Chuan | Ching Feng vs. Feng Tay Enterprises | Ching Feng vs. Taiwan Paiho |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. ECOVE Environment Corp | Sunny Friend vs. TTET Union 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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