Correlation Between Chung Hwa and Casing Macron

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

By analyzing existing cross correlation between Chung Hwa Food and Casing Macron Technology, you can compare the effects of market volatilities on Chung Hwa and Casing Macron 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 Chung Hwa with a short position of Casing Macron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hwa and Casing Macron.

Diversification Opportunities for Chung Hwa and Casing Macron

0.16

Correlation Coefficient

Chung Hwa  Casing Macron

Average diversification

The 3 months correlation between Chung and Casing is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hwa Food and Casing Macron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casing Macron Technology and Chung Hwa 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 Chung Hwa Food are associated (or correlated) with Casing Macron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casing Macron Technology has no effect on the direction of Chung Hwa i.e., Chung Hwa and Casing Macron go up and down completely randomly.

Pair Corralation between Chung Hwa and Casing Macron

Assuming the 90 days trading horizon Chung Hwa Food is expected to generate 0.36 times more return on investment than Casing Macron. However, Chung Hwa Food is 2.8 times less risky than Casing Macron. It trades about 0.09 of its potential returns per unit of risk. Casing Macron Technology is currently generating about -0.03 per unit of risk. If you would invest  8,770  in Chung Hwa Food on December 30, 2024 and sell it today you would earn a total of  400.00  from holding Chung Hwa Food or generate 4.56% return on investment over 90 days.

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

Chung Hwa Food  vs.  Casing Macron Technology

Chung Hwa Food

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chung Hwa Food are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chung Hwa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Casing Macron Technology

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Chung Hwa Food and Casing Macron 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .