Correlation Between Chong Hong and Shin Foong

Can any of the company-specific risk be diversified away by investing in both Chong Hong and Shin Foong 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 Chong Hong and Shin Foong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chong Hong Construction and Shin Foong Specialty, you can compare the effects of market volatilities on Chong Hong and Shin Foong 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 Chong Hong with a short position of Shin Foong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and Shin Foong.

Diversification Opportunities for Chong Hong and Shin Foong

0.7

Correlation Coefficient

Chong Hong  Shin Foong

Poor diversification

The 3 months correlation between Chong and Shin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and Shin Foong Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Foong Specialty and Chong Hong 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 Chong Hong Construction are associated (or correlated) with Shin Foong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Foong Specialty has no effect on the direction of Chong Hong i.e., Chong Hong and Shin Foong go up and down completely randomly.

Pair Corralation between Chong Hong and Shin Foong

Assuming the 90 days trading horizon Chong Hong Construction is expected to generate 1.01 times more return on investment than Shin Foong. However, Chong Hong is 1.01 times more volatile than Shin Foong Specialty. It trades about 0.02 of its potential returns per unit of risk. Shin Foong Specialty is currently generating about 0.0 per unit of risk. If you would invest  7,430  in Chong Hong Construction on October 27, 2024 and sell it today you would earn a total of  960.00  from holding Chong Hong Construction or generate 12.92% return on investment over 90 days.

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

Chong Hong Construction  vs.  Shin Foong Specialty

Chong Hong Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shin Foong Specialty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shin Foong Specialty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chong Hong and Shin Foong

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

The idea behind Chong Hong Construction and Shin Foong Specialty 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.