Correlation Between Chi Hua and Fu Burg
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Fu Burg 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 Fu Burg 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 Fu Burg Industrial, you can compare the effects of market volatilities on Chi Hua and Fu Burg 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 Fu Burg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Fu Burg.
Diversification Opportunities for Chi Hua and Fu Burg
Very good diversification
The 3 months correlation between Chi and 8929 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg Industrial 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 Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of Chi Hua i.e., Chi Hua and Fu Burg go up and down completely randomly.
Pair Corralation between Chi Hua and Fu Burg
Assuming the 90 days trading horizon Chi Hua Fitness is expected to generate 0.23 times more return on investment than Fu Burg. However, Chi Hua Fitness is 4.38 times less risky than Fu Burg. It trades about -0.18 of its potential returns per unit of risk. Fu Burg Industrial is currently generating about -0.08 per unit of risk. If you would invest 3,805 in Chi Hua Fitness on September 26, 2024 and sell it today you would lose (155.00) from holding Chi Hua Fitness or give up 4.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chi Hua Fitness vs. Fu Burg Industrial
Performance |
Timeline |
Chi Hua Fitness |
Fu Burg Industrial |
Chi Hua and Fu Burg Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chi Hua and Fu Burg
The main advantage of trading using opposite Chi Hua and Fu Burg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Fu Burg 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 Fu Burg will offset losses from the drop in Fu Burg's long position.Chi Hua vs. Daxin Materials Corp | Chi Hua vs. Hwa Fong Rubber | Chi Hua vs. Chung Lien Transportation | Chi Hua vs. Elite Material Co |
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Check out your portfolio center.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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