Correlation Between Chi Sheng and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Chi Sheng 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 Sheng 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 Sheng Chemical and Tehmag Foods, you can compare the effects of market volatilities on Chi Sheng 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 Sheng with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Sheng and Tehmag Foods.
Diversification Opportunities for Chi Sheng and Tehmag Foods
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chi and Tehmag is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chi Sheng Chemical and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and Chi Sheng 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 Sheng Chemical 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 Sheng i.e., Chi Sheng and Tehmag Foods go up and down completely randomly.
Pair Corralation between Chi Sheng and Tehmag Foods
Assuming the 90 days trading horizon Chi Sheng Chemical is expected to generate 2.03 times more return on investment than Tehmag Foods. However, Chi Sheng is 2.03 times more volatile than Tehmag Foods. It trades about 0.13 of its potential returns per unit of risk. Tehmag Foods is currently generating about -0.03 per unit of risk. If you would invest 2,615 in Chi Sheng Chemical on September 24, 2024 and sell it today you would earn a total of 175.00 from holding Chi Sheng Chemical or generate 6.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Chi Sheng Chemical vs. Tehmag Foods
Performance |
Timeline |
Chi Sheng Chemical |
Tehmag Foods |
Chi Sheng and Tehmag Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chi Sheng and Tehmag Foods
The main advantage of trading using opposite Chi Sheng and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Sheng 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 Sheng vs. Taiwan Speciality Chemicals | Chi Sheng vs. First Insurance Co | Chi Sheng vs. Chailease Holding Co | Chi Sheng vs. Shinkong Synthetic Fiber |
Tehmag Foods vs. Chi Sheng Chemical | Tehmag Foods vs. Grand Pacific Petrochemical | Tehmag Foods vs. China Steel Corp | Tehmag Foods vs. Chun Yuan Steel |
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 CEOs Directory module to screen CEOs from public companies around the world.
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