Correlation Between President Chain and Uni President
Can any of the company-specific risk be diversified away by investing in both President Chain and Uni President 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 President Chain and Uni President into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between President Chain Store and Uni President Enterprises Corp, you can compare the effects of market volatilities on President Chain and Uni President 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 President Chain with a short position of Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Chain and Uni President.
Diversification Opportunities for President Chain and Uni President
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between President and Uni is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding President Chain Store and Uni President Enterprises Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President Enterp and President Chain 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 President Chain Store are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President Enterp has no effect on the direction of President Chain i.e., President Chain and Uni President go up and down completely randomly.
Pair Corralation between President Chain and Uni President
Assuming the 90 days trading horizon President Chain Store is expected to generate 0.55 times more return on investment than Uni President. However, President Chain Store is 1.81 times less risky than Uni President. It trades about -0.22 of its potential returns per unit of risk. Uni President Enterprises Corp is currently generating about -0.27 per unit of risk. If you would invest 26,650 in President Chain Store on October 22, 2024 and sell it today you would lose (650.00) from holding President Chain Store or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Chain Store vs. Uni President Enterprises Corp
Performance |
| Timeline |
| President Chain Store |
| Uni President Enterp |
President Chain and Uni President Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Chain and Uni President
The main advantage of trading using opposite President Chain and Uni President positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Chain position performs unexpectedly, Uni President 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 Uni President will offset losses from the drop in Uni President's long position.| 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 |
| Uni President vs. President Chain Store | Uni President vs. Formosa Plastics Corp | Uni President vs. Nan Ya Plastics | Uni President vs. Taiwan Cement 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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