Correlation Between Holiday Entertainment and Chunghwa Precision
Can any of the company-specific risk be diversified away by investing in both Holiday Entertainment and Chunghwa Precision 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 Chunghwa Precision 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 Chunghwa Precision Test, you can compare the effects of market volatilities on Holiday Entertainment and Chunghwa Precision 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 Chunghwa Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Entertainment and Chunghwa Precision.
Diversification Opportunities for Holiday Entertainment and Chunghwa Precision
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Holiday and Chunghwa is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Entertainment Co and Chunghwa Precision Test in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Precision Test 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 Chunghwa Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Precision Test has no effect on the direction of Holiday Entertainment i.e., Holiday Entertainment and Chunghwa Precision go up and down completely randomly.
Pair Corralation between Holiday Entertainment and Chunghwa Precision
Assuming the 90 days trading horizon Holiday Entertainment is expected to generate 2.13 times less return on investment than Chunghwa Precision. But when comparing it to its historical volatility, Holiday Entertainment Co is 1.84 times less risky than Chunghwa Precision. It trades about 0.04 of its potential returns per unit of risk. Chunghwa Precision Test is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 52,596 in Chunghwa Precision Test on October 14, 2024 and sell it today you would earn a total of 28,904 from holding Chunghwa Precision Test or generate 54.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holiday Entertainment Co vs. Chunghwa Precision Test
Performance |
| Timeline |
| Holiday Entertainment |
| Chunghwa Precision Test |
Holiday Entertainment and Chunghwa Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Entertainment and Chunghwa Precision
The main advantage of trading using opposite Holiday Entertainment and Chunghwa Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Entertainment position performs unexpectedly, Chunghwa Precision 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 Chunghwa Precision will offset losses from the drop in Chunghwa Precision'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 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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