Correlation Between Grand Plastic and Chung Hwa

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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 Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Grand Plastic Technology  vs.  Chung Hwa Food

 Performance 
       Timeline  
Grand Plastic Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grand Plastic Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Chung Hwa Food 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Chung Hwa Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chung Hwa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.
The idea behind Grand Plastic Technology and Chung Hwa Food 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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