Correlation Between Pou Chen and Cayman Engley
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Cayman Engley 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 Cayman Engley 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 Cayman Engley Industrial, you can compare the effects of market volatilities on Pou Chen and Cayman Engley 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 Cayman Engley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Cayman Engley.
Diversification Opportunities for Pou Chen and Cayman Engley
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pou and Cayman is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Cayman Engley Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayman Engley Industrial 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 Cayman Engley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayman Engley Industrial has no effect on the direction of Pou Chen i.e., Pou Chen and Cayman Engley go up and down completely randomly.
Pair Corralation between Pou Chen and Cayman Engley
Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 0.86 times more return on investment than Cayman Engley. However, Pou Chen Corp is 1.16 times less risky than Cayman Engley. It trades about 0.08 of its potential returns per unit of risk. Cayman Engley Industrial is currently generating about -0.13 per unit of risk. If you would invest 3,560 in Pou Chen Corp on September 24, 2024 and sell it today you would earn a total of 310.00 from holding Pou Chen Corp or generate 8.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Pou Chen Corp vs. Cayman Engley Industrial
Performance |
Timeline |
Pou Chen Corp |
Cayman Engley Industrial |
Pou Chen and Cayman Engley Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pou Chen and Cayman Engley
The main advantage of trading using opposite Pou Chen and Cayman Engley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Cayman Engley 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 Cayman Engley will offset losses from the drop in Cayman Engley's long position.Pou Chen vs. Merida Industry Co | Pou Chen vs. Cheng Shin Rubber | Pou Chen vs. Uni President Enterprises Corp |
Cayman Engley vs. Merida Industry Co | Cayman Engley vs. Cheng Shin Rubber | Cayman Engley vs. Uni President Enterprises Corp | Cayman Engley 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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