Correlation Between Chernan Metal and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Chernan Metal and Asia Electronic 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 Chernan Metal and Asia Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chernan Metal Industrial and Asia Electronic Material, you can compare the effects of market volatilities on Chernan Metal and Asia Electronic 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 Chernan Metal with a short position of Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chernan Metal and Asia Electronic.
Diversification Opportunities for Chernan Metal and Asia Electronic
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chernan and Asia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chernan Metal Industrial and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material and Chernan Metal 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 Chernan Metal Industrial are associated (or correlated) with Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Chernan Metal i.e., Chernan Metal and Asia Electronic go up and down completely randomly.
Pair Corralation between Chernan Metal and Asia Electronic
Assuming the 90 days trading horizon Chernan Metal Industrial is expected to under-perform the Asia Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Chernan Metal Industrial is 1.01 times less risky than Asia Electronic. The stock trades about -0.18 of its potential returns per unit of risk. The Asia Electronic Material is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,060 in Asia Electronic Material on September 5, 2024 and sell it today you would earn a total of 30.00 from holding Asia Electronic Material or generate 1.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chernan Metal Industrial vs. Asia Electronic Material
Performance |
Timeline |
Chernan Metal Industrial |
Asia Electronic Material |
Chernan Metal and Asia Electronic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chernan Metal and Asia Electronic
The main advantage of trading using opposite Chernan Metal and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chernan Metal position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic's long position.The idea behind Chernan Metal Industrial and Asia Electronic Material 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.Asia Electronic vs. International Games System | Asia Electronic vs. China Metal Products | Asia Electronic vs. Dynamic Medical Technologies | Asia Electronic vs. Chernan Metal Industrial |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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