Correlation Between Chialin Precision and Powertech Industrial
Can any of the company-specific risk be diversified away by investing in both Chialin Precision and Powertech Industrial 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 Chialin Precision and Powertech Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chialin Precision Industrial and Powertech Industrial Co, you can compare the effects of market volatilities on Chialin Precision and Powertech Industrial 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 Chialin Precision with a short position of Powertech Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chialin Precision and Powertech Industrial.
Diversification Opportunities for Chialin Precision and Powertech Industrial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chialin and Powertech is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chialin Precision Industrial and Powertech Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertech Industrial and Chialin Precision 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 Chialin Precision Industrial are associated (or correlated) with Powertech Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertech Industrial has no effect on the direction of Chialin Precision i.e., Chialin Precision and Powertech Industrial go up and down completely randomly.
Pair Corralation between Chialin Precision and Powertech Industrial
Assuming the 90 days trading horizon Chialin Precision Industrial is expected to generate 0.52 times more return on investment than Powertech Industrial. However, Chialin Precision Industrial is 1.91 times less risky than Powertech Industrial. It trades about -0.25 of its potential returns per unit of risk. Powertech Industrial Co is currently generating about -0.26 per unit of risk. If you would invest 9,610 in Chialin Precision Industrial on November 3, 2024 and sell it today you would lose (460.00) from holding Chialin Precision Industrial or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chialin Precision Industrial vs. Powertech Industrial Co
Performance |
| Timeline |
| Chialin Precision |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Powertech Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chialin Precision and Powertech Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chialin Precision and Powertech Industrial
The main advantage of trading using opposite Chialin Precision and Powertech Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chialin Precision position performs unexpectedly, Powertech Industrial 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 Powertech Industrial will offset losses from the drop in Powertech Industrial's long position.The idea behind Chialin Precision Industrial and Powertech Industrial Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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