Correlation Between Chen Full and Actron Technology

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

By analyzing existing cross correlation between Chen Full International and Actron Technology, you can compare the effects of market volatilities on Chen Full and Actron 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 Chen Full with a short position of Actron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chen Full and Actron Technology.

Diversification Opportunities for Chen Full and Actron Technology

0.45

Correlation Coefficient

Chen Full  Actron Technology

Very weak diversification

The 3 months correlation between Chen and Actron is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chen Full International and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron Technology and Chen Full 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 Chen Full International are associated (or correlated) with Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of Chen Full i.e., Chen Full and Actron Technology go up and down completely randomly.

Pair Corralation between Chen Full and Actron Technology

Assuming the 90 days trading horizon Chen Full International is expected to generate 0.73 times more return on investment than Actron Technology. However, Chen Full International is 1.38 times less risky than Actron Technology. It trades about 0.04 of its potential returns per unit of risk. Actron Technology is currently generating about 0.0 per unit of risk. If you would invest  3,458  in Chen Full International on September 16, 2024 and sell it today you would earn a total of  1,037  from holding Chen Full International or generate 29.99% return on investment over 90 days.

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

Chen Full International  vs.  Actron Technology

Chen Full International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Actron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Actron Technology 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 Chen Full and Actron Technology

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

The idea behind Chen Full International and Actron Technology 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.