Correlation Between Pou Chen and Hong Ho
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Hong Ho 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 Pou Chen and Hong Ho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pou Chen Corp and Hong Ho Precision, you can compare the effects of market volatilities on Pou Chen and Hong Ho 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 Pou Chen with a short position of Hong Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Hong Ho.
Diversification Opportunities for Pou Chen and Hong Ho
Very weak diversification
The 3 months correlation between Pou and Hong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Hong Ho Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Ho Precision and Pou Chen 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 Pou Chen Corp are associated (or correlated) with Hong Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Ho Precision has no effect on the direction of Pou Chen i.e., Pou Chen and Hong Ho go up and down completely randomly.
Pair Corralation between Pou Chen and Hong Ho
Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 0.57 times more return on investment than Hong Ho. However, Pou Chen Corp is 1.74 times less risky than Hong Ho. It trades about 0.04 of its potential returns per unit of risk. Hong Ho Precision is currently generating about 0.0 per unit of risk. If you would invest 3,755 in Pou Chen Corp on September 23, 2024 and sell it today you would earn a total of 115.00 from holding Pou Chen Corp or generate 3.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pou Chen Corp vs. Hong Ho Precision
Performance |
Timeline |
Pou Chen Corp |
Hong Ho Precision |
Pou Chen and Hong Ho Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pou Chen and Hong Ho
The main advantage of trading using opposite Pou Chen and Hong Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Hong Ho 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 Hong Ho will offset losses from the drop in Hong Ho's long position.Pou Chen vs. Uni President Enterprises Corp | Pou Chen vs. Cheng Shin Rubber | Pou Chen vs. Far Eastern New | Pou Chen vs. Formosa Chemicals Fibre |
Hong Ho vs. Merida Industry Co | Hong Ho vs. Cheng Shin Rubber | Hong Ho vs. Uni President Enterprises Corp | Hong Ho vs. Pou Chen Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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