Correlation Between Channel Well and Chenbro Micom

Can any of the company-specific risk be diversified away by investing in both Channel Well and Chenbro Micom 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 Channel Well and Chenbro Micom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Channel Well Technology and Chenbro Micom Co, you can compare the effects of market volatilities on Channel Well and Chenbro Micom 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 Channel Well with a short position of Chenbro Micom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Channel Well and Chenbro Micom.

Diversification Opportunities for Channel Well and Chenbro Micom

0.53

Correlation Coefficient

Channel Well  Chenbro Micom

Very weak diversification

The 3 months correlation between Channel and Chenbro is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Channel Well Technology and Chenbro Micom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chenbro Micom and Channel Well 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 Channel Well Technology are associated (or correlated) with Chenbro Micom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chenbro Micom has no effect on the direction of Channel Well i.e., Channel Well and Chenbro Micom go up and down completely randomly.

Pair Corralation between Channel Well and Chenbro Micom

Assuming the 90 days trading horizon Channel Well Technology is expected to generate 0.95 times more return on investment than Chenbro Micom. However, Channel Well Technology is 1.05 times less risky than Chenbro Micom. It trades about 0.16 of its potential returns per unit of risk. Chenbro Micom Co is currently generating about 0.05 per unit of risk. If you would invest  7,150  in Channel Well Technology on December 25, 2024 and sell it today you would earn a total of  1,670  from holding Channel Well Technology or generate 23.36% return on investment over 90 days.

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

Channel Well Technology  vs.  Chenbro Micom Co

Channel Well Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Channel Well Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Channel Well showed solid returns over the last few months and may actually be approaching a breakup point.

Chenbro Micom

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chenbro Micom Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chenbro Micom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Channel Well and Chenbro Micom

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

The idea behind Channel Well Technology and Chenbro Micom 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.