Correlation Between President Chain and Promate Electronic
Can any of the company-specific risk be diversified away by investing in both President Chain and Promate Electronic 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 Promate Electronic 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 Promate Electronic Co, you can compare the effects of market volatilities on President Chain and Promate Electronic 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 Promate Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Chain and Promate Electronic.
Diversification Opportunities for President Chain and Promate Electronic
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between President and Promate is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding President Chain Store and Promate Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promate Electronic 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 Promate Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promate Electronic has no effect on the direction of President Chain i.e., President Chain and Promate Electronic go up and down completely randomly.
Pair Corralation between President Chain and Promate Electronic
Assuming the 90 days trading horizon President Chain Store is expected to under-perform the Promate Electronic. But the stock apears to be less risky and, when comparing its historical volatility, President Chain Store is 2.19 times less risky than Promate Electronic. The stock trades about -0.35 of its potential returns per unit of risk. The Promate Electronic Co is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 8,100 in Promate Electronic Co on October 26, 2024 and sell it today you would lose (260.00) from holding Promate Electronic Co or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Chain Store vs. Promate Electronic Co
Performance |
| Timeline |
| President Chain Store |
| Promate Electronic |
President Chain and Promate Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Chain and Promate Electronic
The main advantage of trading using opposite President Chain and Promate Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Chain position performs unexpectedly, Promate Electronic 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 Promate Electronic will offset losses from the drop in Promate Electronic'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 |
| Promate Electronic vs. WPG Holdings | Promate Electronic vs. Topco Scientific Co | Promate Electronic vs. E Life Mall Corp | Promate Electronic vs. Lumax International 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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