Correlation Between President Chain and Mega Financial
Can any of the company-specific risk be diversified away by investing in both President Chain and Mega Financial 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 Mega Financial 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 Mega Financial Holding, you can compare the effects of market volatilities on President Chain and Mega Financial 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 Mega Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Chain and Mega Financial.
Diversification Opportunities for President Chain and Mega Financial
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between President and Mega is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding President Chain Store and Mega Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Financial Holding 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 Mega Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Financial Holding has no effect on the direction of President Chain i.e., President Chain and Mega Financial go up and down completely randomly.
Pair Corralation between President Chain and Mega Financial
Assuming the 90 days trading horizon President Chain is expected to generate 1.22 times less return on investment than Mega Financial. But when comparing it to its historical volatility, President Chain Store is 1.17 times less risky than Mega Financial. It trades about 0.01 of its potential returns per unit of risk. Mega Financial Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,890 in Mega Financial Holding on September 4, 2024 and sell it today you would earn a total of 55.00 from holding Mega Financial Holding or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Chain Store vs. Mega Financial Holding
Performance |
| Timeline |
| President Chain Store |
| Mega Financial Holding |
President Chain and Mega Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Chain and Mega Financial
The main advantage of trading using opposite President Chain and Mega Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Chain position performs unexpectedly, Mega Financial 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 Mega Financial will offset losses from the drop in Mega Financial'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 |
| Mega Financial vs. CTBC Financial Holding | Mega Financial vs. Fubon Financial Holding | Mega Financial vs. First Financial Holding | Mega Financial vs. Cathay 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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