Correlation Between Powertech Technology and Chicony Electronics
Can any of the company-specific risk be diversified away by investing in both Powertech Technology and Chicony Electronics 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 Powertech Technology and Chicony Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powertech Technology and Chicony Electronics Co, you can compare the effects of market volatilities on Powertech Technology and Chicony Electronics 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 Powertech Technology with a short position of Chicony Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Technology and Chicony Electronics.
Diversification Opportunities for Powertech Technology and Chicony Electronics
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Powertech and Chicony is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Technology and Chicony Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Electronics and Powertech Technology 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 Powertech Technology are associated (or correlated) with Chicony Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Electronics has no effect on the direction of Powertech Technology i.e., Powertech Technology and Chicony Electronics go up and down completely randomly.
Pair Corralation between Powertech Technology and Chicony Electronics
Assuming the 90 days trading horizon Powertech Technology is expected to under-perform the Chicony Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Powertech Technology is 1.55 times less risky than Chicony Electronics. The stock trades about -0.1 of its potential returns per unit of risk. The Chicony Electronics Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 15,250 in Chicony Electronics Co on November 4, 2024 and sell it today you would earn a total of 50.00 from holding Chicony Electronics Co or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powertech Technology vs. Chicony Electronics Co
Performance |
| Timeline |
| Powertech Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Chicony Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Powertech Technology and Chicony Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powertech Technology and Chicony Electronics
The main advantage of trading using opposite Powertech Technology and Chicony Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Technology position performs unexpectedly, Chicony Electronics 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 Chicony Electronics will offset losses from the drop in Chicony Electronics' long position.The idea behind Powertech Technology and Chicony Electronics 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.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |