Correlation Between Powertech Industrial and Victory New
Can any of the company-specific risk be diversified away by investing in both Powertech Industrial and Victory New 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 Powertech Industrial and Victory New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powertech Industrial Co and Victory New Materials, you can compare the effects of market volatilities on Powertech Industrial and Victory New 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 Powertech Industrial with a short position of Victory New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Industrial and Victory New.
Diversification Opportunities for Powertech Industrial and Victory New
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Powertech and Victory is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial Co and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials and Powertech Industrial 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 Powertech Industrial Co are associated (or correlated) with Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of Powertech Industrial i.e., Powertech Industrial and Victory New go up and down completely randomly.
Pair Corralation between Powertech Industrial and Victory New
Assuming the 90 days trading horizon Powertech Industrial Co is expected to generate 2.42 times more return on investment than Victory New. However, Powertech Industrial is 2.42 times more volatile than Victory New Materials. It trades about 0.21 of its potential returns per unit of risk. Victory New Materials is currently generating about -0.11 per unit of risk. If you would invest 2,650 in Powertech Industrial Co on August 30, 2024 and sell it today you would earn a total of 355.00 from holding Powertech Industrial Co or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Powertech Industrial Co vs. Victory New Materials
Performance |
| Timeline |
| Powertech Industrial |
| Victory New Materials |
Powertech Industrial and Victory New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powertech Industrial and Victory New
The main advantage of trading using opposite Powertech Industrial and Victory New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Industrial position performs unexpectedly, Victory New 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 Victory New will offset losses from the drop in Victory New's long position.| Powertech Industrial vs. Yulon Motor Co | Powertech Industrial vs. Far Eastern Department | Powertech Industrial vs. China Steel Corp | Powertech Industrial vs. Chang Hwa Commercial |
| Victory New vs. Asia Plastic Recycling | Victory New vs. Hunya Foods Co | Victory New vs. Jinli Group Holdings | Victory New vs. Kwong Fong Industries |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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