Correlation Between Ching Feng and Choice Development
Can any of the company-specific risk be diversified away by investing in both Ching Feng and Choice Development 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 Choice Development 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 Choice Development, you can compare the effects of market volatilities on Ching Feng and Choice Development 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 Choice Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ching Feng and Choice Development.
Diversification Opportunities for Ching Feng and Choice Development
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ching and Choice is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ching Feng Home and Choice Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Development 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 Choice Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Development has no effect on the direction of Ching Feng i.e., Ching Feng and Choice Development go up and down completely randomly.
Pair Corralation between Ching Feng and Choice Development
Assuming the 90 days trading horizon Ching Feng Home is expected to generate 0.95 times more return on investment than Choice Development. However, Ching Feng Home is 1.05 times less risky than Choice Development. It trades about 0.07 of its potential returns per unit of risk. Choice Development is currently generating about 0.06 per unit of risk. If you would invest 1,770 in Ching Feng Home on November 8, 2024 and sell it today you would earn a total of 1,480 from holding Ching Feng Home or generate 83.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ching Feng Home vs. Choice Development
Performance |
| Timeline |
| Ching Feng Home |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Choice Development |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ching Feng and Choice Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ching Feng and Choice Development
The main advantage of trading using opposite Ching Feng and Choice Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ching Feng position performs unexpectedly, Choice Development 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 Choice Development will offset losses from the drop in Choice Development's long position.The idea behind Ching Feng Home and Choice Development pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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