Correlation Between Chia Chang and Ardentec

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Can any of the company-specific risk be diversified away by investing in both Chia Chang and Ardentec 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 Chia Chang and Ardentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia Chang Co and Ardentec, you can compare the effects of market volatilities on Chia Chang and Ardentec 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 Chia Chang with a short position of Ardentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Chang and Ardentec.

Diversification Opportunities for Chia Chang and Ardentec

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Chia and Ardentec is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chia Chang Co and Ardentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardentec and Chia Chang 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 Chia Chang Co are associated (or correlated) with Ardentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardentec has no effect on the direction of Chia Chang i.e., Chia Chang and Ardentec go up and down completely randomly.

Pair Corralation between Chia Chang and Ardentec

Assuming the 90 days trading horizon Chia Chang is expected to generate 1.17 times less return on investment than Ardentec. But when comparing it to its historical volatility, Chia Chang Co is 1.74 times less risky than Ardentec. It trades about 0.04 of its potential returns per unit of risk. Ardentec is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,790  in Ardentec on October 10, 2024 and sell it today you would earn a total of  910.00  from holding Ardentec or generate 19.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Chia Chang Co  vs.  Ardentec

 Performance 
       Timeline  
Chia Chang 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Chia Chang Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chia Chang is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Ardentec 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ardentec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ardentec is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chia Chang and Ardentec Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chia Chang and Ardentec

The main advantage of trading using opposite Chia Chang and Ardentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Chang position performs unexpectedly, Ardentec 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 Ardentec will offset losses from the drop in Ardentec's long position.
The idea behind Chia Chang Co and Ardentec 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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