Correlation Between Powertech Industrial and Chialin Precision
Can any of the company-specific risk be diversified away by investing in both Powertech Industrial and Chialin Precision 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 Chialin Precision 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 Chialin Precision Industrial, you can compare the effects of market volatilities on Powertech Industrial and Chialin Precision 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 Chialin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Industrial and Chialin Precision.
Diversification Opportunities for Powertech Industrial and Chialin Precision
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Powertech and Chialin is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial Co and Chialin Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chialin Precision 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 Chialin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chialin Precision has no effect on the direction of Powertech Industrial i.e., Powertech Industrial and Chialin Precision go up and down completely randomly.
Pair Corralation between Powertech Industrial and Chialin Precision
Assuming the 90 days trading horizon Powertech Industrial Co is expected to generate 1.62 times more return on investment than Chialin Precision. However, Powertech Industrial is 1.62 times more volatile than Chialin Precision Industrial. It trades about 0.05 of its potential returns per unit of risk. Chialin Precision Industrial is currently generating about -0.07 per unit of risk. If you would invest 2,410 in Powertech Industrial Co on August 26, 2024 and sell it today you would earn a total of 400.00 from holding Powertech Industrial Co or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powertech Industrial Co vs. Chialin Precision Industrial
Performance |
| Timeline |
| Powertech Industrial |
| Chialin Precision |
Powertech Industrial and Chialin Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powertech Industrial and Chialin Precision
The main advantage of trading using opposite Powertech Industrial and Chialin Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Industrial position performs unexpectedly, Chialin Precision 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 Chialin Precision will offset losses from the drop in Chialin Precision's long position.| Powertech Industrial vs. Sunny Friend Environmental | Powertech Industrial vs. TTET Union Corp | Powertech Industrial vs. ECOVE Environment Corp | Powertech Industrial vs. Yulon Finance Corp |
| Chialin Precision vs. Advantech Co | Chialin Precision vs. IEI Integration Corp | Chialin Precision vs. Flytech Technology Co | Chialin Precision vs. ADLINK Technology |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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