Correlation Between Yeou Yih and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Yeou Yih and Chung Hwa 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 Yeou Yih and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yeou Yih Steel and Chung Hwa Chemical, you can compare the effects of market volatilities on Yeou Yih and Chung Hwa 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 Yeou Yih with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yeou Yih and Chung Hwa.
Diversification Opportunities for Yeou Yih and Chung Hwa
Poor diversification
The 3 months correlation between Yeou and Chung is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Yeou Yih Steel and Chung Hwa Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Chemical and Yeou Yih 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 Yeou Yih Steel are associated (or correlated) with Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Chemical has no effect on the direction of Yeou Yih i.e., Yeou Yih and Chung Hwa go up and down completely randomly.
Pair Corralation between Yeou Yih and Chung Hwa
Assuming the 90 days trading horizon Yeou Yih Steel is expected to generate 0.26 times more return on investment than Chung Hwa. However, Yeou Yih Steel is 3.81 times less risky than Chung Hwa. It trades about 0.03 of its potential returns per unit of risk. Chung Hwa Chemical is currently generating about -0.22 per unit of risk. If you would invest 1,550 in Yeou Yih Steel on August 26, 2024 and sell it today you would earn a total of 5.00 from holding Yeou Yih Steel or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yeou Yih Steel vs. Chung Hwa Chemical
Performance |
| Timeline |
| Yeou Yih Steel |
| Chung Hwa Chemical |
Yeou Yih and Chung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yeou Yih and Chung Hwa
The main advantage of trading using opposite Yeou Yih and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yeou Yih position performs unexpectedly, Chung Hwa 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 Chung Hwa will offset losses from the drop in Chung Hwa's long position.| Yeou Yih vs. Alchip Technologies | Yeou Yih vs. Avalue Technology | Yeou Yih vs. Integrated Service Technology | Yeou Yih vs. Arbor Technology |
| Chung Hwa vs. Cheng Shin Rubber | Chung Hwa vs. Taiwan Cement Corp | Chung Hwa vs. China Steel Chemical | Chung Hwa vs. Yulon Motor Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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