Correlation Between Chialin Precision and Chaheng Precision

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

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

Diversification Opportunities for Chialin Precision and Chaheng Precision

-0.05

Correlation Coefficient

Chialin Precision  Chaheng Precision

Good diversification

The 3 months correlation between Chialin and Chaheng is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chialin Precision Industrial and Chaheng Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaheng Precision and Chialin Precision 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 Chialin Precision Industrial 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 Chialin Precision i.e., Chialin Precision and Chaheng Precision go up and down completely randomly.

Pair Corralation between Chialin Precision and Chaheng Precision

Assuming the 90 days trading horizon Chialin Precision Industrial is expected to generate 0.91 times more return on investment than Chaheng Precision. However, Chialin Precision Industrial is 1.1 times less risky than Chaheng Precision. It trades about 0.1 of its potential returns per unit of risk. Chaheng Precision Co is currently generating about 0.03 per unit of risk. If you would invest  4,245  in Chialin Precision Industrial on October 8, 2024 and sell it today you would earn a total of  5,385  from holding Chialin Precision Industrial or generate 126.86% return on investment over 90 days.

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

Chialin Precision Industrial  vs.  Chaheng Precision Co

Chialin Precision

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chialin Precision Industrial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chialin Precision showed solid returns over the last few months and may actually be approaching a breakup point.

Chaheng Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chaheng Precision Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Chialin Precision and Chaheng Precision

The main advantage of trading using opposite Chialin Precision and Chaheng Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chialin Precision 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 Chialin Precision Industrial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.