Correlation Between Grand Plastic and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both Grand Plastic 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 Grand Plastic and Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Plastic Technology and Chung Hwa Food, you can compare the effects of market volatilities on Grand Plastic 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 Grand Plastic with a short position of Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Plastic and Chung Hwa.
Diversification Opportunities for Grand Plastic and Chung Hwa
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grand and Chung is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Grand Plastic Technology 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 Grand Plastic 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 Grand Plastic Technology 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 Grand Plastic i.e., Grand Plastic and Chung Hwa go up and down completely randomly.
Pair Corralation between Grand Plastic and Chung Hwa
Assuming the 90 days trading horizon Grand Plastic Technology is expected to generate 7.64 times more return on investment than Chung Hwa. However, Grand Plastic is 7.64 times more volatile than Chung Hwa Food. It trades about 0.12 of its potential returns per unit of risk. Chung Hwa Food is currently generating about -0.04 per unit of risk. If you would invest 22,791 in Grand Plastic Technology on October 11, 2024 and sell it today you would earn a total of 130,209 from holding Grand Plastic Technology or generate 571.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Grand Plastic Technology vs. Chung Hwa Food
Performance |
Timeline |
Grand Plastic Technology |
Chung Hwa Food |
Grand Plastic and Chung Hwa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grand Plastic and Chung Hwa
The main advantage of trading using opposite Grand Plastic and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Plastic 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.Grand Plastic vs. Sun Max Tech | Grand Plastic vs. CVC Technologies | Grand Plastic vs. Adata Technology Co | Grand Plastic vs. Univacco Technology |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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