Correlation Between Fortune Information and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Fortune Information and Chung Hwa 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 Fortune Information and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Information Systems and Chung Hwa Food, you can compare the effects of market volatilities on Fortune Information and Chung Hwa 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 Fortune Information with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Information and Chung Hwa.
Diversification Opportunities for Fortune Information and Chung Hwa
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortune and Chung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Information Systems and Chung Hwa Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Food and Fortune Information 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 Fortune Information Systems are associated (or correlated) with Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Food has no effect on the direction of Fortune Information i.e., Fortune Information and Chung Hwa go up and down completely randomly.
Pair Corralation between Fortune Information and Chung Hwa
Assuming the 90 days trading horizon Fortune Information Systems is expected to generate 5.67 times more return on investment than Chung Hwa. However, Fortune Information is 5.67 times more volatile than Chung Hwa Food. It trades about 0.3 of its potential returns per unit of risk. Chung Hwa Food is currently generating about 0.09 per unit of risk. If you would invest 2,680 in Fortune Information Systems on December 30, 2024 and sell it today you would earn a total of 3,070 from holding Fortune Information Systems or generate 114.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Fortune Information Systems vs. Chung Hwa Food
Performance |
Timeline |
Fortune Information |
Chung Hwa Food |
Fortune Information and Chung Hwa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fortune Information and Chung Hwa
The main advantage of trading using opposite Fortune Information and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Information position performs unexpectedly, Chung Hwa 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 Hwa will offset losses from the drop in Chung Hwa's long position.Fortune Information vs. Stark Technology | Fortune Information vs. Ares International Corp | Fortune Information vs. Leadtek Research | Fortune Information vs. Zinwell |
Chung Hwa vs. China Development Financial | Chung Hwa vs. Yuanta Financial Holdings | Chung Hwa vs. Shih Kuen Plastics | Chung Hwa vs. First Insurance Co |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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