Correlation Between Pontex Polyblend and China Airlines
Can any of the company-specific risk be diversified away by investing in both Pontex Polyblend and China Airlines 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 Pontex Polyblend and China Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pontex Polyblend CoLtd and China Airlines, you can compare the effects of market volatilities on Pontex Polyblend and China Airlines 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 Pontex Polyblend with a short position of China Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pontex Polyblend and China Airlines.
Diversification Opportunities for Pontex Polyblend and China Airlines
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pontex and China is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pontex Polyblend CoLtd and China Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Airlines and Pontex Polyblend 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 Pontex Polyblend CoLtd are associated (or correlated) with China Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Airlines has no effect on the direction of Pontex Polyblend i.e., Pontex Polyblend and China Airlines go up and down completely randomly.
Pair Corralation between Pontex Polyblend and China Airlines
Assuming the 90 days trading horizon Pontex Polyblend CoLtd is expected to generate 1.48 times more return on investment than China Airlines. However, Pontex Polyblend is 1.48 times more volatile than China Airlines. It trades about 0.08 of its potential returns per unit of risk. China Airlines is currently generating about 0.02 per unit of risk. If you would invest 1,237 in Pontex Polyblend CoLtd on August 27, 2024 and sell it today you would earn a total of 1,148 from holding Pontex Polyblend CoLtd or generate 92.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pontex Polyblend CoLtd vs. China Airlines
Performance |
| Timeline |
| Pontex Polyblend CoLtd |
| China Airlines |
Pontex Polyblend and China Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pontex Polyblend and China Airlines
The main advantage of trading using opposite Pontex Polyblend and China Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pontex Polyblend position performs unexpectedly, China Airlines 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 China Airlines will offset losses from the drop in China Airlines' long position.| Pontex Polyblend vs. Loop Telecommunication International | Pontex Polyblend vs. Standard Foods Corp | Pontex Polyblend vs. Quanta Computer | Pontex Polyblend vs. Emerging Display Technologies |
| China Airlines vs. Sunny Friend Environmental | China Airlines vs. TTET Union Corp | China Airlines vs. ECOVE Environment Corp | China Airlines vs. Yulon Finance Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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