Correlation Between Chung Hung and Ardentec
Can any of the company-specific risk be diversified away by investing in both Chung Hung and Ardentec 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 Hung and Ardentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Hung Steel and Ardentec, you can compare the effects of market volatilities on Chung Hung and Ardentec 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 Hung with a short position of Ardentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hung and Ardentec.
Diversification Opportunities for Chung Hung and Ardentec
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chung and Ardentec is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hung Steel and Ardentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardentec and Chung Hung 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 Hung Steel are associated (or correlated) with Ardentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardentec has no effect on the direction of Chung Hung i.e., Chung Hung and Ardentec go up and down completely randomly.
Pair Corralation between Chung Hung and Ardentec
Assuming the 90 days trading horizon Chung Hung Steel is expected to under-perform the Ardentec. But the stock apears to be less risky and, when comparing its historical volatility, Chung Hung Steel is 1.0 times less risky than Ardentec. The stock trades about -0.04 of its potential returns per unit of risk. The Ardentec is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,790 in Ardentec on October 20, 2024 and sell it today you would earn a total of 1,410 from holding Ardentec or generate 29.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Chung Hung Steel vs. Ardentec
Performance |
Timeline |
Chung Hung Steel |
Ardentec |
Chung Hung and Ardentec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chung Hung and Ardentec
The main advantage of trading using opposite Chung Hung and Ardentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hung position performs unexpectedly, Ardentec 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 Ardentec will offset losses from the drop in Ardentec's long position.Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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