Correlation Between Sunfun Info and PChome Online
Can any of the company-specific risk be diversified away by investing in both Sunfun Info and PChome Online 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 Sunfun Info and PChome Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunfun Info Co and PChome Online, you can compare the effects of market volatilities on Sunfun Info and PChome Online 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 Sunfun Info with a short position of PChome Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfun Info and PChome Online.
Diversification Opportunities for Sunfun Info and PChome Online
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sunfun and PChome is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sunfun Info Co and PChome Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PChome Online and Sunfun Info 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 Sunfun Info Co are associated (or correlated) with PChome Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PChome Online has no effect on the direction of Sunfun Info i.e., Sunfun Info and PChome Online go up and down completely randomly.
Pair Corralation between Sunfun Info and PChome Online
Assuming the 90 days trading horizon Sunfun Info is expected to generate 4.3 times less return on investment than PChome Online. But when comparing it to its historical volatility, Sunfun Info Co is 2.86 times less risky than PChome Online. It trades about 0.15 of its potential returns per unit of risk. PChome Online is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,215 in PChome Online on August 28, 2024 and sell it today you would earn a total of 1,205 from holding PChome Online or generate 28.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunfun Info Co vs. PChome Online
Performance |
| Timeline |
| Sunfun Info |
| PChome Online |
Sunfun Info and PChome Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunfun Info and PChome Online
The main advantage of trading using opposite Sunfun Info and PChome Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunfun Info position performs unexpectedly, PChome Online 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 PChome Online will offset losses from the drop in PChome Online's long position.The idea behind Sunfun Info Co and PChome Online 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |