Correlation Between Chunghwa Precision and Li Kang
Can any of the company-specific risk be diversified away by investing in both Chunghwa Precision and Li Kang 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 Chunghwa Precision and Li Kang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunghwa Precision Test and Li Kang Biomedical, you can compare the effects of market volatilities on Chunghwa Precision and Li Kang 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 Chunghwa Precision with a short position of Li Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Precision and Li Kang.
Diversification Opportunities for Chunghwa Precision and Li Kang
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chunghwa and 6242 is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Precision Test and Li Kang Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Kang Biomedical and Chunghwa 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 Chunghwa Precision Test are associated (or correlated) with Li Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Kang Biomedical has no effect on the direction of Chunghwa Precision i.e., Chunghwa Precision and Li Kang go up and down completely randomly.
Pair Corralation between Chunghwa Precision and Li Kang
Assuming the 90 days trading horizon Chunghwa Precision Test is expected to generate 1.39 times more return on investment than Li Kang. However, Chunghwa Precision is 1.39 times more volatile than Li Kang Biomedical. It trades about 0.06 of its potential returns per unit of risk. Li Kang Biomedical is currently generating about 0.01 per unit of risk. If you would invest 46,524 in Chunghwa Precision Test on September 23, 2024 and sell it today you would earn a total of 34,876 from holding Chunghwa Precision Test or generate 74.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chunghwa Precision Test vs. Li Kang Biomedical
Performance |
Timeline |
Chunghwa Precision Test |
Li Kang Biomedical |
Chunghwa Precision and Li Kang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chunghwa Precision and Li Kang
The main advantage of trading using opposite Chunghwa Precision and Li Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Precision position performs unexpectedly, Li Kang 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 Li Kang will offset losses from the drop in Li Kang's long position.Chunghwa Precision vs. Advantech Co | Chunghwa Precision vs. IEI Integration Corp | Chunghwa Precision vs. Flytech Technology Co | Chunghwa Precision vs. Ennoconn Corp |
Li Kang vs. Feng Ching Metal | Li Kang vs. Trade Van Information Services | Li Kang vs. Microtips Technology | Li Kang vs. Chi Hua Fitness |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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