Correlation Between Aerospace Industrial and Chaheng Precision

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

By analyzing existing cross correlation between Aerospace Industrial Development and Chaheng Precision Co, you can compare the effects of market volatilities on Aerospace Industrial and Chaheng Precision 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 Aerospace Industrial with a short position of Chaheng Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerospace Industrial and Chaheng Precision.

Diversification Opportunities for Aerospace Industrial and Chaheng Precision

0.44

Correlation Coefficient

Aerospace Industrial  Chaheng Precision

Very weak diversification

The 3 months correlation between Aerospace and Chaheng is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aerospace Industrial Developme and Chaheng Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaheng Precision and Aerospace Industrial 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 Aerospace Industrial Development are associated (or correlated) with Chaheng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaheng Precision has no effect on the direction of Aerospace Industrial i.e., Aerospace Industrial and Chaheng Precision go up and down completely randomly.

Pair Corralation between Aerospace Industrial and Chaheng Precision

Assuming the 90 days trading horizon Aerospace Industrial Development is expected to under-perform the Chaheng Precision. But the stock apears to be less risky and, when comparing its historical volatility, Aerospace Industrial Development is 1.12 times less risky than Chaheng Precision. The stock trades about -0.14 of its potential returns per unit of risk. The Chaheng Precision Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,050  in Chaheng Precision Co on September 16, 2024 and sell it today you would earn a total of  170.00  from holding Chaheng Precision Co or generate 1.88% return on investment over 90 days.

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

Aerospace Industrial Developme  vs.  Chaheng Precision Co

Aerospace Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerospace Industrial Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Chaheng Precision

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chaheng Precision Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chaheng Precision 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 Aerospace Industrial and Chaheng Precision

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

The idea behind Aerospace Industrial Development and Chaheng Precision Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.