Correlation Between Chi Sheng and Pan Asia
Can any of the company-specific risk be diversified away by investing in both Chi Sheng and Pan Asia 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 Pan Asia 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 Pan Asia Chemical, you can compare the effects of market volatilities on Chi Sheng and Pan Asia 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 Pan Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Sheng and Pan Asia.
Diversification Opportunities for Chi Sheng and Pan Asia
Excellent diversification
The 3 months correlation between Chi and Pan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chi Sheng Chemical and Pan Asia Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Asia Chemical 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 Pan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Asia Chemical has no effect on the direction of Chi Sheng i.e., Chi Sheng and Pan Asia go up and down completely randomly.
Pair Corralation between Chi Sheng and Pan Asia
Assuming the 90 days trading horizon Chi Sheng Chemical is expected to generate 0.48 times more return on investment than Pan Asia. However, Chi Sheng Chemical is 2.09 times less risky than Pan Asia. It trades about 0.22 of its potential returns per unit of risk. Pan Asia Chemical is currently generating about -0.04 per unit of risk. If you would invest 2,605 in Chi Sheng Chemical on September 14, 2024 and sell it today you would earn a total of 255.00 from holding Chi Sheng Chemical or generate 9.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chi Sheng Chemical vs. Pan Asia Chemical
Performance |
Timeline |
Chi Sheng Chemical |
Pan Asia Chemical |
Chi Sheng and Pan Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chi Sheng and Pan Asia
The main advantage of trading using opposite Chi Sheng and Pan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Sheng position performs unexpectedly, Pan Asia 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 Pan Asia will offset losses from the drop in Pan Asia's long position.Chi Sheng vs. Yi Jinn Industrial | Chi Sheng vs. Chung Hwa Food | Chi Sheng vs. Pacific Hospital Supply | Chi Sheng vs. General Plastic Industrial |
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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 Correlations module to find global opportunities by holding instruments from different markets.
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