Correlation Between Chaheng Precision and Greatek Electronics
Can any of the company-specific risk be diversified away by investing in both Chaheng Precision and Greatek Electronics 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 Chaheng Precision and Greatek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chaheng Precision Co and Greatek Electronics, you can compare the effects of market volatilities on Chaheng Precision and Greatek Electronics 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 Chaheng Precision with a short position of Greatek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaheng Precision and Greatek Electronics.
Diversification Opportunities for Chaheng Precision and Greatek Electronics
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chaheng and Greatek is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chaheng Precision Co and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics and Chaheng Precision 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 Chaheng Precision Co are associated (or correlated) with Greatek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatek Electronics has no effect on the direction of Chaheng Precision i.e., Chaheng Precision and Greatek Electronics go up and down completely randomly.
Pair Corralation between Chaheng Precision and Greatek Electronics
Assuming the 90 days trading horizon Chaheng Precision Co is expected to under-perform the Greatek Electronics. In addition to that, Chaheng Precision is 1.24 times more volatile than Greatek Electronics. It trades about -0.05 of its total potential returns per unit of risk. Greatek Electronics is currently generating about -0.05 per unit of volatility. If you would invest 5,800 in Greatek Electronics on September 23, 2024 and sell it today you would lose (200.00) from holding Greatek Electronics or give up 3.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Chaheng Precision Co vs. Greatek Electronics
Performance |
Timeline |
Chaheng Precision |
Greatek Electronics |
Chaheng Precision and Greatek Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chaheng Precision and Greatek Electronics
The main advantage of trading using opposite Chaheng Precision and Greatek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaheng Precision position performs unexpectedly, Greatek Electronics 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 Greatek Electronics will offset losses from the drop in Greatek Electronics' long position.Chaheng Precision vs. CSBC Corp Taiwan | Chaheng Precision vs. Eva Airways Corp | Chaheng Precision vs. Taiwan High Speed | Chaheng Precision vs. China Airlines |
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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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