Correlation Between Chow Tai and Chow Tai

Can any of the company-specific risk be diversified away by investing in both Chow Tai and Chow Tai 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 Chow Tai and Chow Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chow Tai Fook and Chow Tai Fook, you can compare the effects of market volatilities on Chow Tai and Chow Tai 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 Chow Tai with a short position of Chow Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chow Tai and Chow Tai.

Diversification Opportunities for Chow Tai and Chow Tai

0.45

Correlation Coefficient

Chow Tai  Chow Tai

Very weak diversification

The 3 months correlation between Chow and Chow is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chow Tai Fook and Chow Tai Fook in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chow Tai Fook and Chow Tai 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 Chow Tai Fook are associated (or correlated) with Chow Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chow Tai Fook has no effect on the direction of Chow Tai i.e., Chow Tai and Chow Tai go up and down completely randomly.

Pair Corralation between Chow Tai and Chow Tai

Assuming the 90 days horizon Chow Tai Fook is expected to under-perform the Chow Tai. In addition to that, Chow Tai is 1.49 times more volatile than Chow Tai Fook. It trades about -0.21 of its total potential returns per unit of risk. Chow Tai Fook is currently generating about -0.22 per unit of volatility. If you would invest  160.00  in Chow Tai Fook on January 24, 2024 and sell it today you would lose (17.00) from holding Chow Tai Fook or give up 10.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Chow Tai Fook  vs.  Chow Tai Fook

Chow Tai Fook

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chow Tai Fook has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chow Tai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chow Tai Fook

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chow Tai Fook are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Chow Tai is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chow Tai and Chow Tai

The main advantage of trading using opposite Chow Tai and Chow Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chow Tai position performs unexpectedly, Chow Tai 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 Chow Tai will offset losses from the drop in Chow Tai's long position.

The idea behind Chow Tai Fook and Chow Tai Fook pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.