Correlation Between OBI Pharma and Pou Chen
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Pou Chen 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 OBI Pharma and Pou Chen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Pou Chen Corp, you can compare the effects of market volatilities on OBI Pharma and Pou Chen 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 OBI Pharma with a short position of Pou Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Pou Chen.
Diversification Opportunities for OBI Pharma and Pou Chen
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between OBI and Pou is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Pou Chen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pou Chen Corp and OBI Pharma 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 OBI Pharma are associated (or correlated) with Pou Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pou Chen Corp has no effect on the direction of OBI Pharma i.e., OBI Pharma and Pou Chen go up and down completely randomly.
Pair Corralation between OBI Pharma and Pou Chen
Assuming the 90 days trading horizon OBI Pharma is expected to under-perform the Pou Chen. But the stock apears to be less risky and, when comparing its historical volatility, OBI Pharma is 1.43 times less risky than Pou Chen. The stock trades about -0.11 of its potential returns per unit of risk. The Pou Chen Corp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3,830 in Pou Chen Corp on August 28, 2024 and sell it today you would earn a total of 475.00 from holding Pou Chen Corp or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBI Pharma vs. Pou Chen Corp
Performance |
| Timeline |
| OBI Pharma |
| Pou Chen Corp |
OBI Pharma and Pou Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Pou Chen
The main advantage of trading using opposite OBI Pharma and Pou Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, Pou Chen 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 Pou Chen will offset losses from the drop in Pou Chen's long position.The idea behind OBI Pharma and Pou Chen Corp 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.| Pou Chen vs. Taiwan Semiconductor Manufacturing | Pou Chen vs. Hon Hai Precision | Pou Chen vs. MediaTek | Pou Chen vs. Chunghwa Telecom Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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