Correlation Between BenQ Medical and Hung Chou

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

By analyzing existing cross correlation between BenQ Medical Technology and Hung Chou Fiber, you can compare the effects of market volatilities on BenQ Medical and Hung Chou 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 BenQ Medical with a short position of Hung Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Medical and Hung Chou.

Diversification Opportunities for BenQ Medical and Hung Chou

-0.58

Correlation Coefficient

BenQ Medical  Hung Chou

Excellent diversification

The 3 months correlation between BenQ and Hung is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Medical Technology and Hung Chou Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Chou Fiber and BenQ Medical 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 BenQ Medical Technology are associated (or correlated) with Hung Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Chou Fiber has no effect on the direction of BenQ Medical i.e., BenQ Medical and Hung Chou go up and down completely randomly.

Pair Corralation between BenQ Medical and Hung Chou

Assuming the 90 days trading horizon BenQ Medical Technology is expected to under-perform the Hung Chou. But the stock apears to be less risky and, when comparing its historical volatility, BenQ Medical Technology is 1.16 times less risky than Hung Chou. The stock trades about -0.06 of its potential returns per unit of risk. The Hung Chou Fiber is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  996.00  in Hung Chou Fiber on October 9, 2024 and sell it today you would earn a total of  94.00  from holding Hung Chou Fiber or generate 9.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.4%
Values	Daily Returns

BenQ Medical Technology  vs.  Hung Chou Fiber

BenQ Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BenQ Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Hung Chou Fiber

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hung Chou Fiber are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hung Chou may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BenQ Medical and Hung Chou

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

The idea behind BenQ Medical Technology and Hung Chou Fiber 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.