Correlation Between Pou Chen and Walton Advanced
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Walton Advanced 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 Walton Advanced 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 Walton Advanced Engineering, you can compare the effects of market volatilities on Pou Chen and Walton Advanced 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 Walton Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Walton Advanced.
Diversification Opportunities for Pou Chen and Walton Advanced
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pou and Walton is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Walton Advanced Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walton Advanced Engi 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 Walton Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walton Advanced Engi has no effect on the direction of Pou Chen i.e., Pou Chen and Walton Advanced go up and down completely randomly.
Pair Corralation between Pou Chen and Walton Advanced
Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 1.25 times more return on investment than Walton Advanced. However, Pou Chen is 1.25 times more volatile than Walton Advanced Engineering. It trades about 0.25 of its potential returns per unit of risk. Walton Advanced Engineering is currently generating about -0.08 per unit of risk. If you would invest 3,840 in Pou Chen Corp on September 5, 2024 and sell it today you would earn a total of 485.00 from holding Pou Chen Corp or generate 12.63% 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. Walton Advanced Engineering
Performance |
| Timeline |
| Pou Chen Corp |
| Walton Advanced Engi |
Pou Chen and Walton Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pou Chen and Walton Advanced
The main advantage of trading using opposite Pou Chen and Walton Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Walton Advanced 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 Walton Advanced will offset losses from the drop in Walton Advanced'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 |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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