Correlation Between Global Lighting and Chia Chang
Can any of the company-specific risk be diversified away by investing in both Global Lighting and Chia Chang 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 Global Lighting and Chia Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Lighting Technologies and Chia Chang Co, you can compare the effects of market volatilities on Global Lighting and Chia Chang 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 Global Lighting with a short position of Chia Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Lighting and Chia Chang.
Diversification Opportunities for Global Lighting and Chia Chang
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Chia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global Lighting Technologies and Chia Chang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Chang and Global Lighting 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 Global Lighting Technologies are associated (or correlated) with Chia Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Chang has no effect on the direction of Global Lighting i.e., Global Lighting and Chia Chang go up and down completely randomly.
Pair Corralation between Global Lighting and Chia Chang
Assuming the 90 days trading horizon Global Lighting Technologies is expected to generate 2.41 times more return on investment than Chia Chang. However, Global Lighting is 2.41 times more volatile than Chia Chang Co. It trades about 0.25 of its potential returns per unit of risk. Chia Chang Co is currently generating about 0.34 per unit of risk. If you would invest 5,450 in Global Lighting Technologies on December 4, 2024 and sell it today you would earn a total of 280.00 from holding Global Lighting Technologies or generate 5.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Global Lighting Technologies vs. Chia Chang Co
Performance |
Timeline |
Global Lighting Tech |
Chia Chang |
Global Lighting and Chia Chang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Lighting and Chia Chang
The main advantage of trading using opposite Global Lighting and Chia Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Lighting position performs unexpectedly, Chia Chang 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 Chia Chang will offset losses from the drop in Chia Chang's long position.Global Lighting vs. Sunplus Technology Co | Global Lighting vs. Silicon Integrated Systems | Global Lighting vs. Realtek Semiconductor Corp | Global Lighting vs. Elan Microelectronics Corp |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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