Correlation Between PChome Online and Softstar Entertainment
Can any of the company-specific risk be diversified away by investing in both PChome Online and Softstar Entertainment 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 PChome Online and Softstar Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PChome Online and Softstar Entertainment, you can compare the effects of market volatilities on PChome Online and Softstar Entertainment 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 PChome Online with a short position of Softstar Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PChome Online and Softstar Entertainment.
Diversification Opportunities for PChome Online and Softstar Entertainment
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PChome and Softstar is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PChome Online and Softstar Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softstar Entertainment and PChome Online 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 PChome Online are associated (or correlated) with Softstar Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softstar Entertainment has no effect on the direction of PChome Online i.e., PChome Online and Softstar Entertainment go up and down completely randomly.
Pair Corralation between PChome Online and Softstar Entertainment
Assuming the 90 days trading horizon PChome Online is expected to under-perform the Softstar Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, PChome Online is 1.01 times less risky than Softstar Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The Softstar Entertainment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,310 in Softstar Entertainment on October 28, 2024 and sell it today you would lose (510.00) from holding Softstar Entertainment or give up 8.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PChome Online vs. Softstar Entertainment
Performance |
| Timeline |
| PChome Online |
| Softstar Entertainment |
PChome Online and Softstar Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PChome Online and Softstar Entertainment
The main advantage of trading using opposite PChome Online and Softstar Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PChome Online position performs unexpectedly, Softstar Entertainment 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 Softstar Entertainment will offset losses from the drop in Softstar Entertainment's long position.| PChome Online vs. momo Inc | PChome Online vs. President Chain Store | PChome Online vs. Uni President Enterprises Corp | PChome Online vs. Taiwan FamilyMart Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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