Correlation Between Chenming Mold and Cal Comp

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

By analyzing existing cross correlation between Chenming Mold Industrial and Cal Comp Electronics Public, you can compare the effects of market volatilities on Chenming Mold and Cal Comp 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 Chenming Mold with a short position of Cal Comp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenming Mold and Cal Comp.

Diversification Opportunities for Chenming Mold and Cal Comp

0.49

Correlation Coefficient

Chenming Mold  Cal Comp

Very weak diversification

The 3 months correlation between Chenming and Cal is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chenming Mold Industrial and Cal Comp Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Comp Electronics and Chenming Mold 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 Chenming Mold Industrial are associated (or correlated) with Cal Comp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Comp Electronics has no effect on the direction of Chenming Mold i.e., Chenming Mold and Cal Comp go up and down completely randomly.

Pair Corralation between Chenming Mold and Cal Comp

Assuming the 90 days trading horizon Chenming Mold Industrial is expected to generate 1.33 times more return on investment than Cal Comp. However, Chenming Mold is 1.33 times more volatile than Cal Comp Electronics Public. It trades about 0.12 of its potential returns per unit of risk. Cal Comp Electronics Public is currently generating about 0.06 per unit of risk. If you would invest  1,950  in Chenming Mold Industrial on September 14, 2024 and sell it today you would earn a total of  12,900  from holding Chenming Mold Industrial or generate 661.54% return on investment over 90 days.

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

Chenming Mold Industrial  vs.  Cal Comp Electronics Public

Chenming Mold Industrial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chenming Mold Industrial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chenming Mold showed solid returns over the last few months and may actually be approaching a breakup point.

Cal Comp Electronics

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Comp Electronics Public are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cal Comp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chenming Mold and Cal Comp

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

The idea behind Chenming Mold Industrial and Cal Comp Electronics Public 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.