Correlation Between Microelectronics and Chung Fu

Can any of the company-specific risk be diversified away by investing in both Microelectronics and Chung Fu 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 Microelectronics and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microelectronics Technology and Chung Fu Tex International, you can compare the effects of market volatilities on Microelectronics and Chung Fu 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 Microelectronics with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microelectronics and Chung Fu.

Diversification Opportunities for Microelectronics and Chung Fu

-0.68

Correlation Coefficient

Microelectronics  Chung Fu

Excellent diversification

The 3 months correlation between Microelectronics and Chung is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology and Chung Fu Tex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Fu Tex and Microelectronics 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 Microelectronics Technology are associated (or correlated) with Chung Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Fu Tex has no effect on the direction of Microelectronics i.e., Microelectronics and Chung Fu go up and down completely randomly.

Pair Corralation between Microelectronics and Chung Fu

Assuming the 90 days trading horizon Microelectronics Technology is expected to under-perform the Chung Fu. In addition to that, Microelectronics is 1.12 times more volatile than Chung Fu Tex International. It trades about -0.41 of its total potential returns per unit of risk. Chung Fu Tex International is currently generating about 0.15 per unit of volatility. If you would invest  3,285  in Chung Fu Tex International on December 26, 2024 and sell it today you would earn a total of  960.00  from holding Chung Fu Tex International or generate 29.22% return on investment over 90 days.

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

Microelectronics Technology  vs.  Chung Fu Tex International

Microelectronics Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microelectronics Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Chung Fu Tex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chung Fu Tex International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chung Fu showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microelectronics and Chung Fu

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

The idea behind Microelectronics Technology and Chung Fu Tex International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.