Correlation Between Chyang Sheng and Lealea Enterprise

Can any of the company-specific risk be diversified away by investing in both Chyang Sheng and Lealea Enterprise 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 Chyang Sheng and Lealea Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chyang Sheng Dyeing and Lealea Enterprise Co, you can compare the effects of market volatilities on Chyang Sheng and Lealea Enterprise 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 Chyang Sheng with a short position of Lealea Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chyang Sheng and Lealea Enterprise.

Diversification Opportunities for Chyang Sheng and Lealea Enterprise

-0.08

Correlation Coefficient

Chyang Sheng  Lealea Enterprise

Good diversification

The 3 months correlation between Chyang and Lealea is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Chyang Sheng Dyeing and Lealea Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lealea Enterprise and Chyang Sheng 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 Chyang Sheng Dyeing are associated (or correlated) with Lealea Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lealea Enterprise has no effect on the direction of Chyang Sheng i.e., Chyang Sheng and Lealea Enterprise go up and down completely randomly.

Pair Corralation between Chyang Sheng and Lealea Enterprise

Assuming the 90 days trading horizon Chyang Sheng Dyeing is expected to generate 3.04 times more return on investment than Lealea Enterprise. However, Chyang Sheng is 3.04 times more volatile than Lealea Enterprise Co. It trades about 0.07 of its potential returns per unit of risk. Lealea Enterprise Co is currently generating about -0.19 per unit of risk. If you would invest  2,500  in Chyang Sheng Dyeing on December 29, 2024 and sell it today you would earn a total of  225.00  from holding Chyang Sheng Dyeing or generate 9.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Chyang Sheng Dyeing  vs.  Lealea Enterprise Co

Chyang Sheng Dyeing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chyang Sheng Dyeing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chyang Sheng may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lealea Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lealea Enterprise 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 Chyang Sheng and Lealea Enterprise

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

The idea behind Chyang Sheng Dyeing and Lealea Enterprise 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.