Correlation Between Trade Van and PChome Online
Can any of the company-specific risk be diversified away by investing in both Trade Van 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 Trade Van and PChome Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trade Van Information Services and PChome Online, you can compare the effects of market volatilities on Trade Van 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 Trade Van with a short position of PChome Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Van and PChome Online.
Diversification Opportunities for Trade Van and PChome Online
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trade and PChome is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Trade Van Information Services and PChome Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PChome Online and Trade Van 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 Trade Van Information Services 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 Trade Van i.e., Trade Van and PChome Online go up and down completely randomly.
Pair Corralation between Trade Van and PChome Online
Assuming the 90 days trading horizon Trade Van Information Services is expected to generate 0.45 times more return on investment than PChome Online. However, Trade Van Information Services is 2.21 times less risky than PChome Online. It trades about 0.3 of its potential returns per unit of risk. PChome Online is currently generating about -0.13 per unit of risk. If you would invest 8,840 in Trade Van Information Services on November 5, 2024 and sell it today you would earn a total of 420.00 from holding Trade Van Information Services or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trade Van Information Services vs. PChome Online
Performance |
| Timeline |
| Trade Van Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| PChome Online |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Trade Van and PChome Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Van and PChome Online
The main advantage of trading using opposite Trade Van and PChome Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Van 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 Trade Van Information Services 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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