Correlation Between Baotek Industrial and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Baotek Industrial and Chi Hua 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 Baotek Industrial and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baotek Industrial Materials and Chi Hua Fitness, you can compare the effects of market volatilities on Baotek Industrial and Chi Hua 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 Baotek Industrial with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baotek Industrial and Chi Hua.
Diversification Opportunities for Baotek Industrial and Chi Hua
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baotek and Chi is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Baotek Industrial Materials and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Baotek Industrial 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 Baotek Industrial Materials are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Baotek Industrial i.e., Baotek Industrial and Chi Hua go up and down completely randomly.
Pair Corralation between Baotek Industrial and Chi Hua
Assuming the 90 days trading horizon Baotek Industrial Materials is expected to generate 2.07 times more return on investment than Chi Hua. However, Baotek Industrial is 2.07 times more volatile than Chi Hua Fitness. It trades about 0.02 of its potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.1 per unit of risk. If you would invest 4,560 in Baotek Industrial Materials on September 6, 2024 and sell it today you would earn a total of 65.00 from holding Baotek Industrial Materials or generate 1.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Baotek Industrial Materials vs. Chi Hua Fitness
Performance |
Timeline |
Baotek Industrial |
Chi Hua Fitness |
Baotek Industrial and Chi Hua Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baotek Industrial and Chi Hua
The main advantage of trading using opposite Baotek Industrial and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baotek Industrial position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.Baotek Industrial vs. Far Eastern New | Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Formosa Taffeta Co |
Chi Hua vs. Pontex Polyblend CoLtd | Chi Hua vs. EnTie Commercial Bank | Chi Hua vs. Hunya Foods Co | Chi Hua vs. Chung Lien Transportation |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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