Correlation Between Asia Cement and Chia Hsin

Can any of the company-specific risk be diversified away by investing in both Asia Cement and Chia Hsin 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 Asia Cement and Chia Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Cement Corp and Chia Hsin Cement, you can compare the effects of market volatilities on Asia Cement and Chia Hsin 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 Asia Cement with a short position of Chia Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Cement and Chia Hsin.

Diversification Opportunities for Asia Cement and Chia Hsin

0.56

Correlation Coefficient

Asia Cement  Chia Hsin

Very weak diversification

The 3 months correlation between Asia and Chia is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Asia Cement Corp and Chia Hsin Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Hsin Cement and Asia Cement 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 Asia Cement Corp are associated (or correlated) with Chia Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Hsin Cement has no effect on the direction of Asia Cement i.e., Asia Cement and Chia Hsin go up and down completely randomly.

Pair Corralation between Asia Cement and Chia Hsin

Assuming the 90 days trading horizon Asia Cement Corp is expected to under-perform the Chia Hsin. In addition to that, Asia Cement is 1.38 times more volatile than Chia Hsin Cement. It trades about -0.2 of its total potential returns per unit of risk. Chia Hsin Cement is currently generating about -0.16 per unit of volatility. If you would invest  1,750  in Chia Hsin Cement on October 16, 2024 and sell it today you would lose (140.00) from holding Chia Hsin Cement or give up 8.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Asia Cement Corp  vs.  Chia Hsin Cement

Asia Cement Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Cement Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Chia Hsin Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chia Hsin Cement has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Asia Cement and Chia Hsin

The main advantage of trading using opposite Asia Cement and Chia Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Cement position performs unexpectedly, Chia Hsin 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 Chia Hsin will offset losses from the drop in Chia Hsin's long position.

The idea behind Asia Cement Corp and Chia Hsin Cement 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.