Correlation Between Pou Chen and Chien Shing
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Chien Shing 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 Chien Shing 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 Chien Shing Stainless, you can compare the effects of market volatilities on Pou Chen and Chien Shing 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 Chien Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Chien Shing.
Diversification Opportunities for Pou Chen and Chien Shing
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pou and Chien is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Chien Shing Stainless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Shing Stainless 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 Chien Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Shing Stainless has no effect on the direction of Pou Chen i.e., Pou Chen and Chien Shing go up and down completely randomly.
Pair Corralation between Pou Chen and Chien Shing
Assuming the 90 days trading horizon Pou Chen is expected to generate 2.34 times less return on investment than Chien Shing. But when comparing it to its historical volatility, Pou Chen Corp is 1.81 times less risky than Chien Shing. It trades about 0.06 of its potential returns per unit of risk. Chien Shing Stainless is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 574.00 in Chien Shing Stainless on September 4, 2024 and sell it today you would earn a total of 516.00 from holding Chien Shing Stainless or generate 89.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pou Chen Corp vs. Chien Shing Stainless
Performance |
| Timeline |
| Pou Chen Corp |
| Chien Shing Stainless |
Pou Chen and Chien Shing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pou Chen and Chien Shing
The main advantage of trading using opposite Pou Chen and Chien Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Chien Shing 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 Chien Shing will offset losses from the drop in Chien Shing's long position.| Pou Chen vs. Uni President Enterprises Corp | Pou Chen vs. Cheng Shin Rubber | Pou Chen vs. Far Eastern New | Pou Chen vs. Formosa Chemicals Fibre |
| Chien Shing vs. Chung Hung Steel | Chien Shing vs. Chun Yuan Steel | Chien Shing vs. Yieh Hsing Enterprise | Chien Shing vs. Hsin Kuang Steel |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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