Correlation Between Te Chang and Chicony Power
Can any of the company-specific risk be diversified away by investing in both Te Chang and Chicony Power 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 Te Chang and Chicony Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Te Chang Construction and Chicony Power Technology, you can compare the effects of market volatilities on Te Chang and Chicony Power 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 Te Chang with a short position of Chicony Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Te Chang and Chicony Power.
Diversification Opportunities for Te Chang and Chicony Power
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 5511 and Chicony is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Te Chang Construction and Chicony Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Power Technology and Te 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 Te Chang Construction are associated (or correlated) with Chicony Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Power Technology has no effect on the direction of Te Chang i.e., Te Chang and Chicony Power go up and down completely randomly.
Pair Corralation between Te Chang and Chicony Power
Assuming the 90 days trading horizon Te Chang Construction is expected to under-perform the Chicony Power. But the stock apears to be less risky and, when comparing its historical volatility, Te Chang Construction is 3.05 times less risky than Chicony Power. The stock trades about -0.02 of its potential returns per unit of risk. The Chicony Power Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,450 in Chicony Power Technology on October 11, 2024 and sell it today you would earn a total of 250.00 from holding Chicony Power Technology or generate 2.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Te Chang Construction vs. Chicony Power Technology
Performance |
Timeline |
Te Chang Construction |
Chicony Power Technology |
Te Chang and Chicony Power Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Te Chang and Chicony Power
The main advantage of trading using opposite Te Chang and Chicony Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Te Chang position performs unexpectedly, Chicony Power 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 Chicony Power will offset losses from the drop in Chicony Power's long position.Te Chang vs. Sesoda Corp | Te Chang vs. Amulaire Thermal Technology | Te Chang vs. International CSRC Investment | Te Chang vs. Chung Lien Transportation |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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