Correlation Between Chahua Modern and Lens Technology

Can any of the company-specific risk be diversified away by investing in both Chahua Modern and Lens Technology 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 Chahua Modern and Lens Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chahua Modern Housewares and Lens Technology Co, you can compare the effects of market volatilities on Chahua Modern and Lens Technology 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 Chahua Modern with a short position of Lens Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chahua Modern and Lens Technology.

Diversification Opportunities for Chahua Modern and Lens Technology

-0.3

Correlation Coefficient

Chahua Modern  Lens Technology

Very good diversification

The 3 months correlation between Chahua and Lens is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chahua Modern Housewares and Lens Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lens Technology and Chahua Modern 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 Chahua Modern Housewares are associated (or correlated) with Lens Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lens Technology has no effect on the direction of Chahua Modern i.e., Chahua Modern and Lens Technology go up and down completely randomly.

Pair Corralation between Chahua Modern and Lens Technology

Assuming the 90 days trading horizon Chahua Modern Housewares is expected to generate 0.95 times more return on investment than Lens Technology. However, Chahua Modern Housewares is 1.05 times less risky than Lens Technology. It trades about 0.17 of its potential returns per unit of risk. Lens Technology Co is currently generating about 0.07 per unit of risk. If you would invest  1,022  in Chahua Modern Housewares on October 19, 2024 and sell it today you would earn a total of  1,048  from holding Chahua Modern Housewares or generate 102.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.18%
Values	Daily Returns

Chahua Modern Housewares  vs.  Lens Technology Co

Chahua Modern Housewares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chahua Modern Housewares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chahua Modern may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lens Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lens Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lens Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chahua Modern and Lens Technology

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

The idea behind Chahua Modern Housewares and Lens Technology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.