Correlation Between Chi Hua and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Tehmag Foods 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 Chi Hua and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chi Hua Fitness and Tehmag Foods, you can compare the effects of market volatilities on Chi Hua and Tehmag Foods 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 Chi Hua with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Tehmag Foods.
Diversification Opportunities for Chi Hua and Tehmag Foods
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chi and Tehmag is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and Chi Hua 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 Chi Hua Fitness are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Chi Hua i.e., Chi Hua and Tehmag Foods go up and down completely randomly.
Pair Corralation between Chi Hua and Tehmag Foods
Assuming the 90 days trading horizon Chi Hua Fitness is expected to under-perform the Tehmag Foods. In addition to that, Chi Hua is 3.93 times more volatile than Tehmag Foods. It trades about -0.08 of its total potential returns per unit of risk. Tehmag Foods is currently generating about -0.12 per unit of volatility. If you would invest 31,500 in Tehmag Foods on September 14, 2024 and sell it today you would lose (900.00) from holding Tehmag Foods or give up 2.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Chi Hua Fitness vs. Tehmag Foods
Performance |
Timeline |
Chi Hua Fitness |
Tehmag Foods |
Chi Hua and Tehmag Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chi Hua and Tehmag Foods
The main advantage of trading using opposite Chi Hua and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.Chi Hua vs. Feng Tay Enterprises | Chi Hua vs. Pou Chen Corp | Chi Hua vs. Taiwan Paiho | Chi Hua vs. Ruentex Development Co |
Tehmag Foods vs. Dadi Early Childhood Education | Tehmag Foods vs. Chung Lien Transportation | Tehmag Foods vs. Chi Hua Fitness | Tehmag Foods vs. SS Healthcare Holding |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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