Correlation Between Uni President and PChome Online

Can any of the company-specific risk be diversified away by investing in both Uni President and PChome Online 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 Uni President and PChome Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Uni President Enterprises Corp and PChome Online, you can compare the effects of market volatilities on Uni President and PChome Online 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 Uni President with a short position of PChome Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and PChome Online.

Diversification Opportunities for Uni President and PChome Online

0.62

Correlation Coefficient

Uni President  PChome Online

Poor diversification

The 3 months correlation between Uni and PChome is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Uni President Enterprises Corp and PChome Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PChome Online and Uni President 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 Uni President Enterprises Corp are associated (or correlated) with PChome Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PChome Online has no effect on the direction of Uni President i.e., Uni President and PChome Online go up and down completely randomly.

Pair Corralation between Uni President and PChome Online

Assuming the 90 days trading horizon Uni President Enterprises Corp is expected to generate 0.43 times more return on investment than PChome Online. However, Uni President Enterprises Corp is 2.35 times less risky than PChome Online. It trades about 0.01 of its potential returns per unit of risk. PChome Online is currently generating about -0.03 per unit of risk. If you would invest  8,190  in Uni President Enterprises Corp on December 29, 2024 and sell it today you would earn a total of  40.00  from holding Uni President Enterprises Corp or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Uni President Enterprises Corp  vs.  PChome Online

Uni President Enterp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Uni President Enterprises Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Uni President is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PChome Online

Risk-Adjusted Performance

Very Weak

Over the last 90 days PChome Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, PChome Online is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Uni President and PChome Online

The main advantage of trading using opposite Uni President and PChome Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni President position performs unexpectedly, PChome Online 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 PChome Online will offset losses from the drop in PChome Online's long position.

The idea behind Uni President Enterprises Corp and PChome Online pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.