Correlation Between Pegatron Corp and Celxpert Energy
Can any of the company-specific risk be diversified away by investing in both Pegatron Corp and Celxpert Energy 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 Pegatron Corp and Celxpert Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pegatron Corp and Celxpert Energy, you can compare the effects of market volatilities on Pegatron Corp and Celxpert Energy 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 Pegatron Corp with a short position of Celxpert Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pegatron Corp and Celxpert Energy.
Diversification Opportunities for Pegatron Corp and Celxpert Energy
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pegatron and Celxpert is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pegatron Corp and Celxpert Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celxpert Energy and Pegatron Corp 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 Pegatron Corp are associated (or correlated) with Celxpert Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celxpert Energy has no effect on the direction of Pegatron Corp i.e., Pegatron Corp and Celxpert Energy go up and down completely randomly.
Pair Corralation between Pegatron Corp and Celxpert Energy
Assuming the 90 days trading horizon Pegatron Corp is expected to under-perform the Celxpert Energy. But the stock apears to be less risky and, when comparing its historical volatility, Pegatron Corp is 2.81 times less risky than Celxpert Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Celxpert Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,465 in Celxpert Energy on November 2, 2024 and sell it today you would earn a total of 1,185 from holding Celxpert Energy or generate 48.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pegatron Corp vs. Celxpert Energy
Performance |
| Timeline |
| Pegatron Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Celxpert Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Pegatron Corp and Celxpert Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pegatron Corp and Celxpert Energy
The main advantage of trading using opposite Pegatron Corp and Celxpert Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pegatron Corp position performs unexpectedly, Celxpert Energy 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 Celxpert Energy will offset losses from the drop in Celxpert Energy's long position.The idea behind Pegatron Corp and Celxpert Energy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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