Correlation Between Pou Chen and Wowprime Corp
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Wowprime Corp 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 Wowprime Corp 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 Wowprime Corp, you can compare the effects of market volatilities on Pou Chen and Wowprime Corp 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 Wowprime Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Wowprime Corp.
Diversification Opportunities for Pou Chen and Wowprime Corp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pou and Wowprime is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Wowprime Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wowprime Corp 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 Wowprime Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wowprime Corp has no effect on the direction of Pou Chen i.e., Pou Chen and Wowprime Corp go up and down completely randomly.
Pair Corralation between Pou Chen and Wowprime Corp
Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 1.17 times more return on investment than Wowprime Corp. However, Pou Chen is 1.17 times more volatile than Wowprime Corp. It trades about 0.09 of its potential returns per unit of risk. Wowprime Corp is currently generating about 0.01 per unit of risk. If you would invest 3,060 in Pou Chen Corp on September 1, 2024 and sell it today you would earn a total of 1,020 from holding Pou Chen Corp or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pou Chen Corp vs. Wowprime Corp
Performance |
| Timeline |
| Pou Chen Corp |
| Wowprime Corp |
Pou Chen and Wowprime Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pou Chen and Wowprime Corp
The main advantage of trading using opposite Pou Chen and Wowprime Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Wowprime Corp 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 Wowprime Corp will offset losses from the drop in Wowprime Corp'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 |
| Wowprime Corp vs. Gourmet Master Co | Wowprime Corp vs. President Chain Store | Wowprime Corp vs. Uni President Enterprises Corp | Wowprime Corp vs. Formosa International Hotels |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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