Correlation Between Coxon Precise and Powertech Industrial
Can any of the company-specific risk be diversified away by investing in both Coxon Precise 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 Coxon Precise and Powertech Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coxon Precise Industrial and Powertech Industrial Co, you can compare the effects of market volatilities on Coxon Precise 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 Coxon Precise with a short position of Powertech Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coxon Precise and Powertech Industrial.
Diversification Opportunities for Coxon Precise and Powertech Industrial
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coxon and Powertech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Coxon Precise 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 Coxon Precise 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 Coxon Precise 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 Coxon Precise i.e., Coxon Precise and Powertech Industrial go up and down completely randomly.
Pair Corralation between Coxon Precise and Powertech Industrial
Assuming the 90 days trading horizon Coxon Precise Industrial is expected to under-perform the Powertech Industrial. In addition to that, Coxon Precise is 1.03 times more volatile than Powertech Industrial Co. It trades about -0.2 of its total potential returns per unit of risk. Powertech Industrial Co is currently generating about 0.2 per unit of volatility. If you would invest 2,755 in Powertech Industrial Co on September 1, 2024 and sell it today you would earn a total of 330.00 from holding Powertech Industrial Co or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coxon Precise Industrial vs. Powertech Industrial Co
Performance |
| Timeline |
| Coxon Precise Industrial |
| Powertech Industrial |
Coxon Precise and Powertech Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coxon Precise and Powertech Industrial
The main advantage of trading using opposite Coxon Precise and Powertech Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coxon Precise 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 Coxon Precise 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.| Powertech Industrial vs. BES Engineering Co | Powertech Industrial vs. Continental Holdings Corp | Powertech Industrial vs. Kee Tai Properties | Powertech Industrial vs. Hung Sheng Construction |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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