Correlation Between Chong Hong and Tigerair Taiwan
Can any of the company-specific risk be diversified away by investing in both Chong Hong and Tigerair Taiwan 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 Tigerair Taiwan 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 Tigerair Taiwan Co, you can compare the effects of market volatilities on Chong Hong and Tigerair Taiwan 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 Tigerair Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and Tigerair Taiwan.
Diversification Opportunities for Chong Hong and Tigerair Taiwan
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chong and Tigerair is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and Tigerair Taiwan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigerair Taiwan 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 Tigerair Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigerair Taiwan has no effect on the direction of Chong Hong i.e., Chong Hong and Tigerair Taiwan go up and down completely randomly.
Pair Corralation between Chong Hong and Tigerair Taiwan
Assuming the 90 days trading horizon Chong Hong Construction is expected to under-perform the Tigerair Taiwan. But the stock apears to be less risky and, when comparing its historical volatility, Chong Hong Construction is 1.34 times less risky than Tigerair Taiwan. The stock trades about -0.13 of its potential returns per unit of risk. The Tigerair Taiwan Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,580 in Tigerair Taiwan Co on September 15, 2024 and sell it today you would earn a total of 900.00 from holding Tigerair Taiwan Co or generate 13.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chong Hong Construction vs. Tigerair Taiwan Co
Performance |
Timeline |
Chong Hong Construction |
Tigerair Taiwan |
Chong Hong and Tigerair Taiwan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chong Hong and Tigerair Taiwan
The main advantage of trading using opposite Chong Hong and Tigerair Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, Tigerair Taiwan 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 Tigerair Taiwan will offset losses from the drop in Tigerair Taiwan's long position.Chong Hong vs. Huaku Development Co | Chong Hong vs. Farglory Land Development | Chong Hong vs. Highwealth Construction Corp | Chong Hong vs. Ruentex Development Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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