Correlation Between Chung Hwa and Mitake Information

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

Diversification Opportunities for Chung Hwa and Mitake Information

-0.58

Correlation Coefficient

Chung Hwa  Mitake Information

Excellent diversification

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

Pair Corralation between Chung Hwa and Mitake Information

Assuming the 90 days trading horizon Chung Hwa Food is expected to under-perform the Mitake Information. But the stock apears to be less risky and, when comparing its historical volatility, Chung Hwa Food is 1.98 times less risky than Mitake Information. The stock trades about -0.14 of its potential returns per unit of risk. The Mitake Information is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  6,320  in Mitake Information on September 15, 2024 and sell it today you would earn a total of  590.00  from holding Mitake Information or generate 9.34% return on investment over 90 days.

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

Chung Hwa Food  vs.  Mitake Information

Chung Hwa Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chung Hwa Food has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Mitake Information

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mitake Information are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mitake Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chung Hwa and Mitake Information

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

The idea behind Chung Hwa Food and Mitake Information 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.