Correlation Between Cameo Communications and Chia Yi

Can any of the company-specific risk be diversified away by investing in both Cameo Communications and Chia Yi 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 Cameo Communications and Chia Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cameo Communications and Chia Yi Steel, you can compare the effects of market volatilities on Cameo Communications and Chia Yi 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 Cameo Communications with a short position of Chia Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameo Communications and Chia Yi.

Diversification Opportunities for Cameo Communications and Chia Yi

0.18

Correlation Coefficient

Cameo Communications  Chia Yi

Average diversification

The 3 months correlation between Cameo and Chia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Chia Yi Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Yi Steel and Cameo Communications 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 Cameo Communications are associated (or correlated) with Chia Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Yi Steel has no effect on the direction of Cameo Communications i.e., Cameo Communications and Chia Yi go up and down completely randomly.

Pair Corralation between Cameo Communications and Chia Yi

Assuming the 90 days trading horizon Cameo Communications is expected to generate 2.96 times less return on investment than Chia Yi. But when comparing it to its historical volatility, Cameo Communications is 1.23 times less risky than Chia Yi. It trades about 0.02 of its potential returns per unit of risk. Chia Yi Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,040  in Chia Yi Steel on September 16, 2024 and sell it today you would earn a total of  75.00  from holding Chia Yi Steel or generate 7.21% return on investment over 90 days.

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

Cameo Communications  vs.  Chia Yi Steel

Cameo Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cameo Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Cameo Communications is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chia Yi Steel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chia Yi Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chia Yi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cameo Communications and Chia Yi

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

The idea behind Cameo Communications and Chia Yi Steel 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.