Correlation Between Test Rite and President Chain
Can any of the company-specific risk be diversified away by investing in both Test Rite and President Chain 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 Test Rite and President Chain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Test Rite International and President Chain Store, you can compare the effects of market volatilities on Test Rite and President Chain 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 Test Rite with a short position of President Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Test Rite and President Chain.
Diversification Opportunities for Test Rite and President Chain
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Test and President is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Test Rite International and President Chain Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Chain Store and Test Rite 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 Test Rite International are associated (or correlated) with President Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Chain Store has no effect on the direction of Test Rite i.e., Test Rite and President Chain go up and down completely randomly.
Pair Corralation between Test Rite and President Chain
Assuming the 90 days trading horizon Test Rite is expected to generate 2.41 times less return on investment than President Chain. But when comparing it to its historical volatility, Test Rite International is 1.33 times less risky than President Chain. It trades about 0.01 of its potential returns per unit of risk. President Chain Store is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 26,243 in President Chain Store on September 2, 2024 and sell it today you would earn a total of 807.00 from holding President Chain Store or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Test Rite International vs. President Chain Store
Performance |
| Timeline |
| Test Rite International |
| President Chain Store |
Test Rite and President Chain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Test Rite and President Chain
The main advantage of trading using opposite Test Rite and President Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Test Rite position performs unexpectedly, President Chain 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 President Chain will offset losses from the drop in President Chain's long position.| Test Rite vs. President Chain Store | Test Rite vs. Far Eastern Department | Test Rite vs. Mercuries Associates Holding | Test Rite vs. China Motor Corp |
| President Chain vs. Uni President Enterprises Corp | President Chain vs. Formosa Plastics Corp | President Chain vs. Chunghwa Telecom Co | President Chain vs. Fubon Financial Holding |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |