Correlation Between Pou Chen and Great Wall
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Great Wall 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 Pou Chen and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pou Chen Corp and Great Wall Enterprise, you can compare the effects of market volatilities on Pou Chen and Great Wall 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 Pou Chen with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Great Wall.
Diversification Opportunities for Pou Chen and Great Wall
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pou and Great is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Great Wall Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Enterprise and Pou Chen 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 Pou Chen Corp are associated (or correlated) with Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Enterprise has no effect on the direction of Pou Chen i.e., Pou Chen and Great Wall go up and down completely randomly.
Pair Corralation between Pou Chen and Great Wall
Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 3.33 times more return on investment than Great Wall. However, Pou Chen is 3.33 times more volatile than Great Wall Enterprise. It trades about 0.32 of its potential returns per unit of risk. Great Wall Enterprise is currently generating about 0.39 per unit of risk. If you would invest 3,830 in Pou Chen Corp on August 27, 2024 and sell it today you would earn a total of 475.00 from holding Pou Chen Corp or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pou Chen Corp vs. Great Wall Enterprise
Performance |
| Timeline |
| Pou Chen Corp |
| Great Wall Enterprise |
Pou Chen and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pou Chen and Great Wall
The main advantage of trading using opposite Pou Chen and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall's long position.| Pou Chen vs. Taiwan Semiconductor Manufacturing | Pou Chen vs. Hon Hai Precision | Pou Chen vs. MediaTek | Pou Chen vs. Chunghwa Telecom Co |
| Great Wall vs. Taiwan Cement Corp | Great Wall vs. Ruentex Development Co | Great Wall vs. Symtek Automation Asia | Great Wall vs. CTCI 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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