Correlation Between Chaheng Precision and Cheng Uei

Can any of the company-specific risk be diversified away by investing in both Chaheng Precision and Cheng Uei 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 Chaheng Precision and Cheng Uei into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chaheng Precision Co and Cheng Uei Precision, you can compare the effects of market volatilities on Chaheng Precision and Cheng Uei 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 Chaheng Precision with a short position of Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaheng Precision and Cheng Uei.

Diversification Opportunities for Chaheng Precision and Cheng Uei

0.04

Correlation Coefficient

Chaheng Precision  Cheng Uei

Significant diversification

The 3 months correlation between Chaheng and Cheng is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chaheng Precision Co and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision and Chaheng Precision 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 Chaheng Precision Co are associated (or correlated) with Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of Chaheng Precision i.e., Chaheng Precision and Cheng Uei go up and down completely randomly.

Pair Corralation between Chaheng Precision and Cheng Uei

Assuming the 90 days trading horizon Chaheng Precision Co is expected to generate 0.46 times more return on investment than Cheng Uei. However, Chaheng Precision Co is 2.19 times less risky than Cheng Uei. It trades about -0.12 of its potential returns per unit of risk. Cheng Uei Precision is currently generating about -0.26 per unit of risk. If you would invest  9,290  in Chaheng Precision Co on September 27, 2024 and sell it today you would lose (340.00) from holding Chaheng Precision Co or give up 3.66% of portfolio value over 90 days.

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

Chaheng Precision Co  vs.  Cheng Uei Precision

Chaheng Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chaheng Precision Co 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.

Cheng Uei Precision

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cheng Uei Precision are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cheng Uei showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chaheng Precision and Cheng Uei

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

The idea behind Chaheng Precision Co and Cheng Uei Precision 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.