Correlation Between Chung Fu and Swancor Holding

Can any of the company-specific risk be diversified away by investing in both Chung Fu and Swancor Holding 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 Chung Fu and Swancor Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chung Fu Tex International and Swancor Holding Co, you can compare the effects of market volatilities on Chung Fu and Swancor Holding 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 Chung Fu with a short position of Swancor Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Swancor Holding.

Diversification Opportunities for Chung Fu and Swancor Holding

-0.5

Correlation Coefficient

Chung Fu  Swancor Holding

Very good diversification

The 3 months correlation between Chung and Swancor is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Swancor Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swancor Holding and Chung Fu 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 Chung Fu Tex International are associated (or correlated) with Swancor Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swancor Holding has no effect on the direction of Chung Fu i.e., Chung Fu and Swancor Holding go up and down completely randomly.

Pair Corralation between Chung Fu and Swancor Holding

Assuming the 90 days trading horizon Chung Fu Tex International is expected to generate 2.06 times more return on investment than Swancor Holding. However, Chung Fu is 2.06 times more volatile than Swancor Holding Co. It trades about 0.14 of its potential returns per unit of risk. Swancor Holding Co is currently generating about -0.11 per unit of risk. If you would invest  3,300  in Chung Fu Tex International on December 30, 2024 and sell it today you would earn a total of  940.00  from holding Chung Fu Tex International or generate 28.48% return on investment over 90 days.

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

Chung Fu Tex International  vs.  Swancor Holding Co

Chung Fu Tex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chung Fu Tex International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chung Fu showed solid returns over the last few months and may actually be approaching a breakup point.

Swancor Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swancor Holding Co 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 Chung Fu and Swancor Holding

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

The idea behind Chung Fu Tex International and Swancor Holding Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.