Correlation Between Chamni Eye and Chin Huay

Can any of the company-specific risk be diversified away by investing in both Chamni Eye and Chin Huay 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 Chamni Eye and Chin Huay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chamni Eye PCL and Chin Huay PCL, you can compare the effects of market volatilities on Chamni Eye and Chin Huay 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 Chamni Eye with a short position of Chin Huay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chamni Eye and Chin Huay.

Diversification Opportunities for Chamni Eye and Chin Huay

0.57

Correlation Coefficient

Chamni Eye  Chin Huay

Very weak diversification

The 3 months correlation between Chamni and Chin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chamni Eye PCL and Chin Huay PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Huay PCL and Chamni Eye 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 Chamni Eye PCL are associated (or correlated) with Chin Huay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Huay PCL has no effect on the direction of Chamni Eye i.e., Chamni Eye and Chin Huay go up and down completely randomly.

Pair Corralation between Chamni Eye and Chin Huay

Assuming the 90 days trading horizon Chamni Eye PCL is expected to under-perform the Chin Huay. In addition to that, Chamni Eye is 2.54 times more volatile than Chin Huay PCL. It trades about -0.13 of its total potential returns per unit of risk. Chin Huay PCL is currently generating about -0.05 per unit of volatility. If you would invest  200.00  in Chin Huay PCL on December 2, 2024 and sell it today you would lose (7.00) from holding Chin Huay PCL or give up 3.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Chamni Eye PCL  vs.  Chin Huay PCL

Chamni Eye PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chamni Eye PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Chin Huay PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chin Huay PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Chin Huay is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Chamni Eye and Chin Huay

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

The idea behind Chamni Eye PCL and Chin Huay PCL 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 Global Correlations module to find global opportunities by holding instruments from different markets.