Correlation Between Chi Sheng and Posiflex Technology

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

By analyzing existing cross correlation between Chi Sheng Chemical and Posiflex Technology, you can compare the effects of market volatilities on Chi Sheng and Posiflex Technology 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 Chi Sheng with a short position of Posiflex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Sheng and Posiflex Technology.

Diversification Opportunities for Chi Sheng and Posiflex Technology

-0.57

Correlation Coefficient

Chi Sheng  Posiflex Technology

Excellent diversification

The 3 months correlation between Chi and Posiflex is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chi Sheng Chemical and Posiflex Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posiflex Technology and Chi Sheng 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 Chi Sheng Chemical are associated (or correlated) with Posiflex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posiflex Technology has no effect on the direction of Chi Sheng i.e., Chi Sheng and Posiflex Technology go up and down completely randomly.

Pair Corralation between Chi Sheng and Posiflex Technology

Assuming the 90 days trading horizon Chi Sheng Chemical is expected to generate 0.37 times more return on investment than Posiflex Technology. However, Chi Sheng Chemical is 2.67 times less risky than Posiflex Technology. It trades about 0.14 of its potential returns per unit of risk. Posiflex Technology is currently generating about -0.07 per unit of risk. If you would invest  2,780  in Chi Sheng Chemical on December 22, 2024 and sell it today you would earn a total of  285.00  from holding Chi Sheng Chemical or generate 10.25% return on investment over 90 days.

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

Chi Sheng Chemical  vs.  Posiflex Technology

Chi Sheng Chemical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chi Sheng Chemical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chi Sheng may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Posiflex Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Posiflex 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Chi Sheng and Posiflex Technology

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

The idea behind Chi Sheng Chemical and Posiflex 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.