Correlation Between Sesoda Corp and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Sesoda Corp and Chung Hwa 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 Sesoda Corp and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sesoda Corp and Chung Hwa Chemical, you can compare the effects of market volatilities on Sesoda Corp and Chung Hwa 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 Sesoda Corp with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sesoda Corp and Chung Hwa.
Diversification Opportunities for Sesoda Corp and Chung Hwa
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sesoda and Chung is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sesoda Corp and Chung Hwa Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Chemical and Sesoda Corp 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 Sesoda Corp are associated (or correlated) with Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Chemical has no effect on the direction of Sesoda Corp i.e., Sesoda Corp and Chung Hwa go up and down completely randomly.
Pair Corralation between Sesoda Corp and Chung Hwa
Assuming the 90 days trading horizon Sesoda Corp is expected to generate 0.83 times more return on investment than Chung Hwa. However, Sesoda Corp is 1.21 times less risky than Chung Hwa. It trades about -0.01 of its potential returns per unit of risk. Chung Hwa Chemical is currently generating about -0.13 per unit of risk. If you would invest 4,120 in Sesoda Corp on November 28, 2024 and sell it today you would lose (60.00) from holding Sesoda Corp or give up 1.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.25% |
Values | Daily Returns |
Sesoda Corp vs. Chung Hwa Chemical
Performance |
Timeline |
Sesoda Corp |
Chung Hwa Chemical |
Sesoda Corp and Chung Hwa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sesoda Corp and Chung Hwa
The main advantage of trading using opposite Sesoda Corp and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sesoda Corp position performs unexpectedly, Chung Hwa 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 Chung Hwa will offset losses from the drop in Chung Hwa's long position.Sesoda Corp vs. Taiwan Fertilizer Co | Sesoda Corp vs. Sinon Corp | Sesoda Corp vs. Eternal Materials Co | Sesoda Corp vs. Oriental Union Chemical |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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