Correlation Between Mechema Chemicals and Chaheng Precision

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

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

Diversification Opportunities for Mechema Chemicals and Chaheng Precision

0.09

Correlation Coefficient

Mechema Chemicals  Chaheng Precision

Significant diversification

The 3 months correlation between Mechema and Chaheng is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mechema Chemicals Int and Chaheng Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaheng Precision and Mechema Chemicals 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 Mechema Chemicals Int are associated (or correlated) with Chaheng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaheng Precision has no effect on the direction of Mechema Chemicals i.e., Mechema Chemicals and Chaheng Precision go up and down completely randomly.

Pair Corralation between Mechema Chemicals and Chaheng Precision

Assuming the 90 days trading horizon Mechema Chemicals Int is expected to under-perform the Chaheng Precision. In addition to that, Mechema Chemicals is 1.49 times more volatile than Chaheng Precision Co. It trades about -0.06 of its total potential returns per unit of risk. Chaheng Precision Co is currently generating about 0.09 per unit of volatility. If you would invest  8,950  in Chaheng Precision Co on December 24, 2024 and sell it today you would earn a total of  540.00  from holding Chaheng Precision Co or generate 6.03% return on investment over 90 days.

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

Mechema Chemicals Int  vs.  Chaheng Precision Co

Mechema Chemicals Int

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mechema Chemicals Int 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.

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.

Pair Trading with Mechema Chemicals and Chaheng Precision

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

The idea behind Mechema Chemicals Int and Chaheng Precision 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.