Correlation Between Chung Fu and Shining Building

Can any of the company-specific risk be diversified away by investing in both Chung Fu and Shining Building 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 Shining Building 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 Shining Building Business, you can compare the effects of market volatilities on Chung Fu and Shining Building 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 Shining Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Shining Building.

Diversification Opportunities for Chung Fu and Shining Building

0.14

Correlation Coefficient

Chung Fu  Shining Building

Average diversification

The 3 months correlation between Chung and Shining is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Shining Building Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shining Building Business 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 Shining Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shining Building Business has no effect on the direction of Chung Fu i.e., Chung Fu and Shining Building go up and down completely randomly.

Pair Corralation between Chung Fu and Shining Building

Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Shining Building. In addition to that, Chung Fu is 1.68 times more volatile than Shining Building Business. It trades about -0.17 of its total potential returns per unit of risk. Shining Building Business is currently generating about -0.2 per unit of volatility. If you would invest  1,130  in Shining Building Business on October 9, 2024 and sell it today you would lose (115.00) from holding Shining Building Business or give up 10.18% of portfolio value over 90 days.

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

Chung Fu Tex International  vs.  Shining Building Business

Chung Fu Tex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chung Fu Tex International 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.

Shining Building Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shining Building Business has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shining Building is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chung Fu and Shining Building

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

The idea behind Chung Fu Tex International and Shining Building Business 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.