Correlation Between Chaheng Precision and First Hotel

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

Diversification Opportunities for Chaheng Precision and First Hotel

0.41

Correlation Coefficient

Chaheng Precision  First Hotel

Very weak diversification

The 3 months correlation between Chaheng and First is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chaheng Precision Co and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel 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 First Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hotel has no effect on the direction of Chaheng Precision i.e., Chaheng Precision and First Hotel go up and down completely randomly.

Pair Corralation between Chaheng Precision and First Hotel

Assuming the 90 days trading horizon Chaheng Precision Co is expected to generate 2.21 times more return on investment than First Hotel. However, Chaheng Precision is 2.21 times more volatile than First Hotel Co. It trades about 0.08 of its potential returns per unit of risk. First Hotel Co is currently generating about 0.02 per unit of risk. If you would invest  8,990  in Chaheng Precision Co on December 22, 2024 and sell it today you would earn a total of  500.00  from holding Chaheng Precision Co or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Chaheng Precision Co  vs.  First Hotel Co

Chaheng Precision

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chaheng Precision Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chaheng Precision may actually be approaching a critical reversion point that can send shares even higher in April 2025.

First Hotel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Hotel Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, First Hotel 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 Chaheng Precision and First Hotel

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

The idea behind Chaheng Precision Co and First Hotel Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.