Correlation Between Advanced Energy and Pou Chen
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and Pou Chen 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 Advanced Energy and Pou Chen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Energy Solution and Pou Chen Corp, you can compare the effects of market volatilities on Advanced Energy and Pou Chen 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 Advanced Energy with a short position of Pou Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and Pou Chen.
Diversification Opportunities for Advanced Energy and Pou Chen
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Advanced and Pou is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Solution and Pou Chen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pou Chen Corp and Advanced Energy 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 Advanced Energy Solution are associated (or correlated) with Pou Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pou Chen Corp has no effect on the direction of Advanced Energy i.e., Advanced Energy and Pou Chen go up and down completely randomly.
Pair Corralation between Advanced Energy and Pou Chen
Assuming the 90 days trading horizon Advanced Energy Solution is expected to generate 1.81 times more return on investment than Pou Chen. However, Advanced Energy is 1.81 times more volatile than Pou Chen Corp. It trades about 0.04 of its potential returns per unit of risk. Pou Chen Corp is currently generating about 0.04 per unit of risk. If you would invest 67,232 in Advanced Energy Solution on November 27, 2024 and sell it today you would earn a total of 26,868 from holding Advanced Energy Solution or generate 39.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Advanced Energy Solution vs. Pou Chen Corp
Performance |
| Timeline |
| Advanced Energy Solution |
| Pou Chen Corp |
Advanced Energy and Pou Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and Pou Chen
The main advantage of trading using opposite Advanced Energy and Pou Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, Pou Chen 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 Pou Chen will offset losses from the drop in Pou Chen's long position.| Advanced Energy vs. Nan Ya Printed | Advanced Energy vs. Lotes Co | Advanced Energy vs. eMemory Technology | Advanced Energy vs. Alchip Technologies |
| Pou Chen vs. Uni President Enterprises Corp | Pou Chen vs. Cheng Shin Rubber | Pou Chen vs. Far Eastern New | Pou Chen vs. Formosa Chemicals Fibre |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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