Correlation Between X Legend and Cheng Mei
Can any of the company-specific risk be diversified away by investing in both X Legend and Cheng Mei 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 X Legend and Cheng Mei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Legend Entertainment Co and Cheng Mei Materials, you can compare the effects of market volatilities on X Legend and Cheng Mei 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 X Legend with a short position of Cheng Mei. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Legend and Cheng Mei.
Diversification Opportunities for X Legend and Cheng Mei
Excellent diversification
The 3 months correlation between 4994 and Cheng is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding X Legend Entertainment Co and Cheng Mei Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Mei Materials and X Legend 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 X Legend Entertainment Co are associated (or correlated) with Cheng Mei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Mei Materials has no effect on the direction of X Legend i.e., X Legend and Cheng Mei go up and down completely randomly.
Pair Corralation between X Legend and Cheng Mei
Assuming the 90 days trading horizon X Legend Entertainment Co is expected to under-perform the Cheng Mei. In addition to that, X Legend is 1.32 times more volatile than Cheng Mei Materials. It trades about -0.08 of its total potential returns per unit of risk. Cheng Mei Materials is currently generating about 0.1 per unit of volatility. If you would invest 1,300 in Cheng Mei Materials on December 4, 2024 and sell it today you would earn a total of 75.00 from holding Cheng Mei Materials or generate 5.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
X Legend Entertainment Co vs. Cheng Mei Materials
Performance |
Timeline |
X Legend Entertainment |
Cheng Mei Materials |
X Legend and Cheng Mei Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with X Legend and Cheng Mei
The main advantage of trading using opposite X Legend and Cheng Mei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Legend position performs unexpectedly, Cheng Mei 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 Cheng Mei will offset losses from the drop in Cheng Mei's long position.X Legend vs. Abnova Taiwan Corp | X Legend vs. Cheng Mei Materials | X Legend vs. BizLink Holding | X Legend vs. Lemtech Holdings Co |
Cheng Mei vs. I Hwa Industrial Co | Cheng Mei vs. HOYA Resort Hotel | Cheng Mei vs. Landis Taipei Hotel | Cheng Mei vs. Mosa Industrial Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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