Correlation Between Chialin Precision and United Radiant

Can any of the company-specific risk be diversified away by investing in both Chialin Precision and United Radiant 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 United Radiant 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 United Radiant Technology, you can compare the effects of market volatilities on Chialin Precision and United Radiant 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 United Radiant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chialin Precision and United Radiant.

Diversification Opportunities for Chialin Precision and United Radiant

-0.41

Correlation Coefficient

Chialin Precision  United Radiant

Very good diversification

The 3 months correlation between Chialin and United is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chialin Precision Industrial and United Radiant Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Radiant Technology 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 United Radiant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Radiant Technology has no effect on the direction of Chialin Precision i.e., Chialin Precision and United Radiant go up and down completely randomly.

Pair Corralation between Chialin Precision and United Radiant

Assuming the 90 days trading horizon Chialin Precision Industrial is expected to generate 0.42 times more return on investment than United Radiant. However, Chialin Precision Industrial is 2.39 times less risky than United Radiant. It trades about 0.12 of its potential returns per unit of risk. United Radiant Technology is currently generating about -0.02 per unit of risk. If you would invest  8,380  in Chialin Precision Industrial on October 25, 2024 and sell it today you would earn a total of  770.00  from holding Chialin Precision Industrial or generate 9.19% return on investment over 90 days.

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

Chialin Precision Industrial  vs.  United Radiant Technology

Chialin Precision

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chialin Precision Industrial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chialin Precision may actually be approaching a critical reversion point that can send shares even higher in February 2025.

United Radiant Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Radiant Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, United Radiant 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 United Radiant

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

The idea behind Chialin Precision Industrial and United Radiant Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.