Correlation Between Analog Integrations and Chunghwa Precision

Can any of the company-specific risk be diversified away by investing in both Analog Integrations and Chunghwa Precision 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 Analog Integrations and Chunghwa Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Analog Integrations and Chunghwa Precision Test, you can compare the effects of market volatilities on Analog Integrations and Chunghwa Precision 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 Analog Integrations with a short position of Chunghwa Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Integrations and Chunghwa Precision.

Diversification Opportunities for Analog Integrations and Chunghwa Precision

-0.79

Correlation Coefficient

Analog Integrations  Chunghwa Precision

Pay attention - limited upside

The 3 months correlation between Analog and Chunghwa is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Analog Integrations and Chunghwa Precision Test in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Precision Test and Analog Integrations 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 Analog Integrations are associated (or correlated) with Chunghwa Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Precision Test has no effect on the direction of Analog Integrations i.e., Analog Integrations and Chunghwa Precision go up and down completely randomly.

Pair Corralation between Analog Integrations and Chunghwa Precision

Assuming the 90 days trading horizon Analog Integrations is expected to under-perform the Chunghwa Precision. But the stock apears to be less risky and, when comparing its historical volatility, Analog Integrations is 1.04 times less risky than Chunghwa Precision. The stock trades about -0.08 of its potential returns per unit of risk. The Chunghwa Precision Test is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  50,300  in Chunghwa Precision Test on September 14, 2024 and sell it today you would earn a total of  37,200  from holding Chunghwa Precision Test or generate 73.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Analog Integrations  vs.  Chunghwa Precision Test

Analog Integrations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Integrations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Chunghwa Precision Test

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Precision Test are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chunghwa Precision showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analog Integrations and Chunghwa Precision

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

The idea behind Analog Integrations and Chunghwa Precision Test 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.