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
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Powertech and Chicony is 0.05. 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 generate 2.36 times less return on investment than Chicony Electronics. But when comparing it to its historical volatility, Powertech Technology is 1.0 times less risky than Chicony Electronics. It trades about 0.03 of its potential returns per unit of risk. Chicony Electronics Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,600 in Chicony Electronics Co on November 19, 2024 and sell it today you would earn a total of 5,450 from holding Chicony Electronics Co or generate 51.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Powertech Technology vs. Chicony Electronics Co
Performance |
| Timeline |
| Powertech Technology |
| Chicony Electronics |
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.| Powertech Technology vs. Novatek Microelectronics Corp | Powertech Technology vs. King Yuan Electronics | Powertech Technology vs. Realtek Semiconductor Corp | Powertech Technology vs. Nanya Technology Corp |
| Chicony Electronics vs. Lite On Technology Corp | Chicony Electronics vs. Inventec Corp | Chicony Electronics vs. Compal Electronics | Chicony Electronics vs. Synnex Technology International |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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