Correlation Between Chaheng Precision and Sinbon Electronics

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

Diversification Opportunities for Chaheng Precision and Sinbon Electronics

0.24

Correlation Coefficient

Chaheng Precision  Sinbon Electronics

Modest diversification

The 3 months correlation between Chaheng and Sinbon is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Chaheng Precision Co and Sinbon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinbon Electronics 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 Sinbon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinbon Electronics has no effect on the direction of Chaheng Precision i.e., Chaheng Precision and Sinbon Electronics go up and down completely randomly.

Pair Corralation between Chaheng Precision and Sinbon Electronics

Assuming the 90 days trading horizon Chaheng Precision Co is expected to generate 0.58 times more return on investment than Sinbon Electronics. However, Chaheng Precision Co is 1.73 times less risky than Sinbon Electronics. It trades about 0.13 of its potential returns per unit of risk. Sinbon Electronics Co is currently generating about 0.05 per unit of risk. If you would invest  8,990  in Chaheng Precision Co on December 28, 2024 and sell it today you would earn a total of  900.00  from holding Chaheng Precision Co or generate 10.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Chaheng Precision Co  vs.  Sinbon Electronics Co

Chaheng Precision

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chaheng Precision Co are ranked lower than 10 (%) 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.

Sinbon Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinbon Electronics Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sinbon Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chaheng Precision and Sinbon Electronics

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

The idea behind Chaheng Precision Co and Sinbon Electronics 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.