Correlation Between Chia Chang and X Legend

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

Diversification Opportunities for Chia Chang and X Legend

0.37

Correlation Coefficient

Chia Chang  X Legend

Weak diversification

The 3 months correlation between Chia and 4994 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chia Chang Co and X Legend Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Legend Entertainment 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 X Legend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Legend Entertainment has no effect on the direction of Chia Chang i.e., Chia Chang and X Legend go up and down completely randomly.

Pair Corralation between Chia Chang and X Legend

Assuming the 90 days trading horizon Chia Chang Co is expected to generate 0.59 times more return on investment than X Legend. However, Chia Chang Co is 1.7 times less risky than X Legend. It trades about 0.0 of its potential returns per unit of risk. X Legend Entertainment Co is currently generating about -0.05 per unit of risk. If you would invest  4,145  in Chia Chang Co on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Chia Chang Co or generate 0.0% return on investment over 90 days.

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

Chia Chang Co  vs.  X Legend Entertainment Co

Chia Chang

Risk-Adjusted Performance

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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

X Legend Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days X Legend Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, X Legend 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 Chia Chang and X Legend

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

The idea behind Chia Chang Co and X Legend Entertainment 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.