Correlation Between Pou Chen and Vivotek
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Vivotek 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 Vivotek 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 Vivotek, you can compare the effects of market volatilities on Pou Chen and Vivotek 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 Vivotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Vivotek.
Diversification Opportunities for Pou Chen and Vivotek
Very poor diversification
The 3 months correlation between Pou and Vivotek is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Vivotek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivotek 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 Vivotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivotek has no effect on the direction of Pou Chen i.e., Pou Chen and Vivotek go up and down completely randomly.
Pair Corralation between Pou Chen and Vivotek
Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 0.89 times more return on investment than Vivotek. However, Pou Chen Corp is 1.12 times less risky than Vivotek. It trades about 0.16 of its potential returns per unit of risk. Vivotek is currently generating about 0.03 per unit of risk. If you would invest 3,840 in Pou Chen Corp on September 3, 2024 and sell it today you would earn a total of 240.00 from holding Pou Chen Corp or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pou Chen Corp vs. Vivotek
Performance |
| Timeline |
| Pou Chen Corp |
| Vivotek |
Pou Chen and Vivotek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pou Chen and Vivotek
The main advantage of trading using opposite Pou Chen and Vivotek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Vivotek 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 Vivotek will offset losses from the drop in Vivotek's long position.| Pou Chen vs. Tainan Spinning Co | Pou Chen vs. Chia Her Industrial | Pou Chen vs. WiseChip Semiconductor | Pou Chen vs. Novatek Microelectronics Corp |
| Vivotek vs. Taiwan Semiconductor Manufacturing | Vivotek vs. Yang Ming Marine | Vivotek vs. ASE Industrial Holding | Vivotek vs. AU Optronics |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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