Correlation Between Holiday Entertainment and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Holiday Entertainment and Chernan Metal 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 Holiday Entertainment and Chernan Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holiday Entertainment Co and Chernan Metal Industrial, you can compare the effects of market volatilities on Holiday Entertainment and Chernan Metal 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 Holiday Entertainment with a short position of Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Entertainment and Chernan Metal.
Diversification Opportunities for Holiday Entertainment and Chernan Metal
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holiday and Chernan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Entertainment Co and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial and Holiday Entertainment 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 Holiday Entertainment Co are associated (or correlated) with Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Holiday Entertainment i.e., Holiday Entertainment and Chernan Metal go up and down completely randomly.
Pair Corralation between Holiday Entertainment and Chernan Metal
Assuming the 90 days trading horizon Holiday Entertainment Co is expected to generate 0.57 times more return on investment than Chernan Metal. However, Holiday Entertainment Co is 1.77 times less risky than Chernan Metal. It trades about 0.03 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about 0.01 per unit of risk. If you would invest 6,770 in Holiday Entertainment Co on October 13, 2024 and sell it today you would earn a total of 1,060 from holding Holiday Entertainment Co or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holiday Entertainment Co vs. Chernan Metal Industrial
Performance |
| Timeline |
| Holiday Entertainment |
| Chernan Metal Industrial |
Holiday Entertainment and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Entertainment and Chernan Metal
The main advantage of trading using opposite Holiday Entertainment and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Entertainment position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.| Holiday Entertainment vs. Yulon Finance Corp | Holiday Entertainment vs. Taiwan Secom Co | Holiday Entertainment vs. Taiwan Shin Kong | Holiday Entertainment vs. Formosa International Hotels |
| Chernan Metal vs. Da Cin Construction Co | Chernan Metal vs. Chailease Holding Co | Chernan Metal vs. Cheng Mei Materials | Chernan Metal vs. TECO Electric Machinery |
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 Stocks Directory module to find actively traded stocks across global markets.
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