Correlation Between Cheng Shin and Cub Elecparts

Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Cub Elecparts 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 Cub Elecparts 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 Cub Elecparts, you can compare the effects of market volatilities on Cheng Shin and Cub Elecparts 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 Cub Elecparts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Cub Elecparts.

Diversification Opportunities for Cheng Shin and Cub Elecparts

0.42

Correlation Coefficient

Cheng Shin  Cub Elecparts

Very weak diversification

The 3 months correlation between Cheng and Cub is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Cub Elecparts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cub Elecparts 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 Cub Elecparts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cub Elecparts has no effect on the direction of Cheng Shin i.e., Cheng Shin and Cub Elecparts go up and down completely randomly.

Pair Corralation between Cheng Shin and Cub Elecparts

Assuming the 90 days trading horizon Cheng Shin is expected to generate 1.29 times less return on investment than Cub Elecparts. In addition to that, Cheng Shin is 1.05 times more volatile than Cub Elecparts. It trades about 0.02 of its total potential returns per unit of risk. Cub Elecparts is currently generating about 0.03 per unit of volatility. If you would invest  9,800  in Cub Elecparts on September 22, 2024 and sell it today you would earn a total of  300.00  from holding Cub Elecparts or generate 3.06% return on investment over 90 days.

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

Cheng Shin Rubber  vs.  Cub Elecparts

Cheng Shin Rubber

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cheng Shin Rubber are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Cheng Shin is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cub Elecparts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cub Elecparts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Cub Elecparts is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cheng Shin and Cub Elecparts

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

The idea behind Cheng Shin Rubber and Cub Elecparts 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.