Correlation Between Aerospace Industrial and Chong Hong
Can any of the company-specific risk be diversified away by investing in both Aerospace Industrial and Chong Hong 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 Chong Hong 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 Chong Hong Construction, you can compare the effects of market volatilities on Aerospace Industrial and Chong Hong 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 Chong Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerospace Industrial and Chong Hong.
Diversification Opportunities for Aerospace Industrial and Chong Hong
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aerospace and Chong is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aerospace Industrial Developme and Chong Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chong Hong Construction 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 Chong Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chong Hong Construction has no effect on the direction of Aerospace Industrial i.e., Aerospace Industrial and Chong Hong go up and down completely randomly.
Pair Corralation between Aerospace Industrial and Chong Hong
Assuming the 90 days trading horizon Aerospace Industrial is expected to generate 16.47 times less return on investment than Chong Hong. But when comparing it to its historical volatility, Aerospace Industrial Development is 1.27 times less risky than Chong Hong. It trades about 0.01 of its potential returns per unit of risk. Chong Hong Construction is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8,760 in Chong Hong Construction on December 5, 2024 and sell it today you would earn a total of 740.00 from holding Chong Hong Construction or generate 8.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Aerospace Industrial Developme vs. Chong Hong Construction
Performance |
Timeline |
Aerospace Industrial |
Chong Hong Construction |
Aerospace Industrial and Chong Hong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aerospace Industrial and Chong Hong
The main advantage of trading using opposite Aerospace Industrial and Chong Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerospace Industrial position performs unexpectedly, Chong Hong 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 Chong Hong will offset losses from the drop in Chong Hong's long position.Aerospace Industrial vs. CSBC Corp Taiwan | Aerospace Industrial vs. Eva Airways Corp | Aerospace Industrial vs. Taiwan High Speed | Aerospace Industrial vs. China Airlines |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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