Correlation Between Chung Hsin and Symtek Automation

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

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

Diversification Opportunities for Chung Hsin and Symtek Automation

-0.54

Correlation Coefficient

Chung Hsin  Symtek Automation

Excellent diversification

The 3 months correlation between Chung and Symtek is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Symtek Automation Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symtek Automation Asia and Chung Hsin 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 Hsin Electric Machinery are associated (or correlated) with Symtek Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symtek Automation Asia has no effect on the direction of Chung Hsin i.e., Chung Hsin and Symtek Automation go up and down completely randomly.

Pair Corralation between Chung Hsin and Symtek Automation

Assuming the 90 days trading horizon Chung Hsin is expected to generate 1.08 times less return on investment than Symtek Automation. In addition to that, Chung Hsin is 1.19 times more volatile than Symtek Automation Asia. It trades about 0.07 of its total potential returns per unit of risk. Symtek Automation Asia is currently generating about 0.09 per unit of volatility. If you would invest  7,558  in Symtek Automation Asia on September 20, 2024 and sell it today you would earn a total of  11,942  from holding Symtek Automation Asia or generate 158.0% return on investment over 90 days.

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

Chung Hsin Electric Machinery  vs.  Symtek Automation Asia

Chung Hsin Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chung Hsin Electric Machinery 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.

Symtek Automation Asia

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Symtek Automation Asia are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Symtek Automation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chung Hsin and Symtek Automation

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

The idea behind Chung Hsin Electric Machinery and Symtek Automation Asia 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.