Correlation Between Chi Hua and United Radiant

Can any of the company-specific risk be diversified away by investing in both Chi Hua and United Radiant 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 Chi Hua and United Radiant into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chi Hua Fitness and United Radiant Technology, you can compare the effects of market volatilities on Chi Hua and United Radiant 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 Chi Hua with a short position of United Radiant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and United Radiant.

Diversification Opportunities for Chi Hua and United Radiant

-0.72

Correlation Coefficient

Chi Hua  United Radiant

Pay attention - limited upside

The 3 months correlation between Chi and United is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and United Radiant Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Radiant Technology and Chi Hua 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 Chi Hua Fitness are associated (or correlated) with United Radiant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Radiant Technology has no effect on the direction of Chi Hua i.e., Chi Hua and United Radiant go up and down completely randomly.

Pair Corralation between Chi Hua and United Radiant

Assuming the 90 days trading horizon Chi Hua Fitness is expected to generate 0.32 times more return on investment than United Radiant. However, Chi Hua Fitness is 3.1 times less risky than United Radiant. It trades about -0.21 of its potential returns per unit of risk. United Radiant Technology is currently generating about -0.13 per unit of risk. If you would invest  3,805  in Chi Hua Fitness on September 24, 2024 and sell it today you would lose (170.00) from holding Chi Hua Fitness or give up 4.47% of portfolio value over 90 days.

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

Chi Hua Fitness  vs.  United Radiant Technology

Chi Hua Fitness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chi Hua Fitness 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.

United Radiant Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Radiant Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, United Radiant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chi Hua and United Radiant

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

The idea behind Chi Hua Fitness and United Radiant Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.