Correlation Between Chicony Electronics and Transcend Information

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

By analyzing existing cross correlation between Chicony Electronics Co and Transcend Information, you can compare the effects of market volatilities on Chicony Electronics and Transcend Information 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 Chicony Electronics with a short position of Transcend Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicony Electronics and Transcend Information.

Diversification Opportunities for Chicony Electronics and Transcend Information

0.76

Correlation Coefficient

Chicony Electronics  Transcend Information

Poor diversification

The 3 months correlation between Chicony and Transcend is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Chicony Electronics Co and Transcend Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcend Information and Chicony Electronics 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 Chicony Electronics Co are associated (or correlated) with Transcend Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcend Information has no effect on the direction of Chicony Electronics i.e., Chicony Electronics and Transcend Information go up and down completely randomly.

Pair Corralation between Chicony Electronics and Transcend Information

Assuming the 90 days trading horizon Chicony Electronics Co is expected to generate 1.25 times more return on investment than Transcend Information. However, Chicony Electronics is 1.25 times more volatile than Transcend Information. It trades about -0.06 of its potential returns per unit of risk. Transcend Information is currently generating about -0.21 per unit of risk. If you would invest  16,500  in Chicony Electronics Co on October 9, 2024 and sell it today you would lose (1,100) from holding Chicony Electronics Co or give up 6.67% of portfolio value over 90 days.

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

Chicony Electronics Co  vs.  Transcend Information

Chicony Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chicony Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chicony Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Transcend Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transcend Information 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Chicony Electronics and Transcend Information

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

The idea behind Chicony Electronics Co and Transcend Information 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.