Correlation Between Pontex Polyblend and Chunghwa Precision
Can any of the company-specific risk be diversified away by investing in both Pontex Polyblend and Chunghwa Precision 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 Chunghwa Precision 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 Chunghwa Precision Test, you can compare the effects of market volatilities on Pontex Polyblend and Chunghwa Precision 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 Chunghwa Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pontex Polyblend and Chunghwa Precision.
Diversification Opportunities for Pontex Polyblend and Chunghwa Precision
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pontex and Chunghwa is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pontex Polyblend CoLtd and Chunghwa Precision Test in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Precision Test 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 Chunghwa Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Precision Test has no effect on the direction of Pontex Polyblend i.e., Pontex Polyblend and Chunghwa Precision go up and down completely randomly.
Pair Corralation between Pontex Polyblend and Chunghwa Precision
Assuming the 90 days trading horizon Pontex Polyblend CoLtd is expected to generate 0.52 times more return on investment than Chunghwa Precision. However, Pontex Polyblend CoLtd is 1.93 times less risky than Chunghwa Precision. It trades about 0.21 of its potential returns per unit of risk. Chunghwa Precision Test is currently generating about -0.14 per unit of risk. If you would invest 2,195 in Pontex Polyblend CoLtd on November 4, 2024 and sell it today you would earn a total of 95.00 from holding Pontex Polyblend CoLtd or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pontex Polyblend CoLtd vs. Chunghwa Precision Test
Performance |
| Timeline |
| Pontex Polyblend CoLtd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Chunghwa Precision Test |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Pontex Polyblend and Chunghwa Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pontex Polyblend and Chunghwa Precision
The main advantage of trading using opposite Pontex Polyblend and Chunghwa Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pontex Polyblend position performs unexpectedly, Chunghwa Precision 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 Chunghwa Precision will offset losses from the drop in Chunghwa Precision's long position.The idea behind Pontex Polyblend CoLtd and Chunghwa Precision Test 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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