Correlation Between Cheng Shin and Mobiletron Electronics
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Mobiletron Electronics 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 Cheng Shin and Mobiletron Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheng Shin Rubber and Mobiletron Electronics Co, you can compare the effects of market volatilities on Cheng Shin and Mobiletron Electronics 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 Cheng Shin with a short position of Mobiletron Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Mobiletron Electronics.
Diversification Opportunities for Cheng Shin and Mobiletron Electronics
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cheng and Mobiletron is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Mobiletron Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobiletron Electronics and Cheng Shin 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 Cheng Shin Rubber are associated (or correlated) with Mobiletron Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobiletron Electronics has no effect on the direction of Cheng Shin i.e., Cheng Shin and Mobiletron Electronics go up and down completely randomly.
Pair Corralation between Cheng Shin and Mobiletron Electronics
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 0.83 times more return on investment than Mobiletron Electronics. However, Cheng Shin Rubber is 1.2 times less risky than Mobiletron Electronics. It trades about 0.06 of its potential returns per unit of risk. Mobiletron Electronics Co is currently generating about -0.01 per unit of risk. If you would invest 3,420 in Cheng Shin Rubber on September 25, 2024 and sell it today you would earn a total of 1,580 from holding Cheng Shin Rubber or generate 46.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cheng Shin Rubber vs. Mobiletron Electronics Co
Performance |
Timeline |
Cheng Shin Rubber |
Mobiletron Electronics |
Cheng Shin and Mobiletron Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cheng Shin and Mobiletron Electronics
The main advantage of trading using opposite Cheng Shin and Mobiletron Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Mobiletron Electronics 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 Mobiletron Electronics will offset losses from the drop in Mobiletron Electronics' long position.Cheng Shin vs. Merida Industry Co | Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Pou Chen Corp |
Mobiletron Electronics vs. Merida Industry Co | Mobiletron Electronics vs. Cheng Shin Rubber | Mobiletron Electronics vs. Uni President Enterprises Corp | Mobiletron Electronics vs. Pou Chen Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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