Correlation Between Palladyne and Chung Hung

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

By analyzing existing cross correlation between Palladyne AI Corp and Chung Hung Steel, you can compare the effects of market volatilities on Palladyne and Chung Hung 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 Palladyne with a short position of Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palladyne and Chung Hung.

Diversification Opportunities for Palladyne and Chung Hung

-0.26

Correlation Coefficient

Palladyne  Chung Hung

Very good diversification

The 3 months correlation between Palladyne and Chung is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Palladyne AI Corp and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung Steel and Palladyne 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 Palladyne AI Corp are associated (or correlated) with Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of Palladyne i.e., Palladyne and Chung Hung go up and down completely randomly.

Pair Corralation between Palladyne and Chung Hung

Given the investment horizon of 90 days Palladyne AI Corp is expected to generate 4.7 times more return on investment than Chung Hung. However, Palladyne is 4.7 times more volatile than Chung Hung Steel. It trades about 0.14 of its potential returns per unit of risk. Chung Hung Steel is currently generating about 0.16 per unit of risk. If you would invest  359.00  in Palladyne AI Corp on December 22, 2024 and sell it today you would earn a total of  377.00  from holding Palladyne AI Corp or generate 105.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Palladyne AI Corp  vs.  Chung Hung Steel

Palladyne AI Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palladyne AI Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Palladyne displayed solid returns over the last few months and may actually be approaching a breakup point.

Chung Hung Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chung Hung Steel are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chung Hung showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palladyne and Chung Hung

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

The idea behind Palladyne AI Corp and Chung Hung 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.

Check out your portfolio center.

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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.