Correlation Between Cheng Uei and Ichia Technologies

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

By analyzing existing cross correlation between Cheng Uei Precision and Ichia Technologies, you can compare the effects of market volatilities on Cheng Uei and Ichia Technologies 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 Uei with a short position of Ichia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Uei and Ichia Technologies.

Diversification Opportunities for Cheng Uei and Ichia Technologies

-0.29

Correlation Coefficient

Cheng Uei  Ichia Technologies

Very good diversification

The 3 months correlation between Cheng and Ichia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Uei Precision and Ichia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichia Technologies and Cheng Uei 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 Uei Precision are associated (or correlated) with Ichia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichia Technologies has no effect on the direction of Cheng Uei i.e., Cheng Uei and Ichia Technologies go up and down completely randomly.

Pair Corralation between Cheng Uei and Ichia Technologies

Assuming the 90 days trading horizon Cheng Uei Precision is expected to generate 1.69 times more return on investment than Ichia Technologies. However, Cheng Uei is 1.69 times more volatile than Ichia Technologies. It trades about -0.04 of its potential returns per unit of risk. Ichia Technologies is currently generating about -0.1 per unit of risk. If you would invest  6,850  in Cheng Uei Precision on October 15, 2024 and sell it today you would lose (170.00) from holding Cheng Uei Precision or give up 2.48% of portfolio value over 90 days.

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

Cheng Uei Precision  vs.  Ichia Technologies

Cheng Uei Precision

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheng Uei Precision are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cheng Uei may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ichia Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ichia Technologies 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 Cheng Uei and Ichia Technologies

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

The idea behind Cheng Uei Precision and Ichia Technologies 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.