Correlation Between PChome Online and Momo
Can any of the company-specific risk be diversified away by investing in both PChome Online and Momo 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 Momo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PChome Online and momo Inc, you can compare the effects of market volatilities on PChome Online and Momo 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 Momo. Check out your portfolio center. Please also check ongoing floating volatility patterns of PChome Online and Momo.
Diversification Opportunities for PChome Online and Momo
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PChome and Momo is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding PChome Online and momo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on momo Inc 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 Momo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of momo Inc has no effect on the direction of PChome Online i.e., PChome Online and Momo go up and down completely randomly.
Pair Corralation between PChome Online and Momo
Assuming the 90 days trading horizon PChome Online is expected to generate 4.09 times more return on investment than Momo. However, PChome Online is 4.09 times more volatile than momo Inc. It trades about 0.23 of its potential returns per unit of risk. momo Inc is currently generating about 0.0 per unit of risk. If you would invest 4,215 in PChome Online on August 29, 2024 and sell it today you would earn a total of 1,205 from holding PChome Online or generate 28.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PChome Online vs. momo Inc
Performance |
| Timeline |
| PChome Online |
| momo Inc |
PChome Online and Momo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PChome Online and Momo
The main advantage of trading using opposite PChome Online and Momo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PChome Online position performs unexpectedly, Momo 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 Momo will offset losses from the drop in Momo's long position.The idea behind PChome Online and momo Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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