Correlation Between Makalot Industrial and Pou Chen

Can any of the company-specific risk be diversified away by investing in both Makalot Industrial and Pou Chen 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 Makalot Industrial and Pou Chen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Makalot Industrial Co and Pou Chen Corp, you can compare the effects of market volatilities on Makalot Industrial and Pou Chen 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 Makalot Industrial with a short position of Pou Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makalot Industrial and Pou Chen.

Diversification Opportunities for Makalot Industrial and Pou Chen

-0.8

Correlation Coefficient

Makalot Industrial  Pou Chen

Pay attention - limited upside

The 3 months correlation between Makalot and Pou is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Makalot Industrial Co and Pou Chen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pou Chen Corp and Makalot Industrial 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 Makalot Industrial Co are associated (or correlated) with Pou Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pou Chen Corp has no effect on the direction of Makalot Industrial i.e., Makalot Industrial and Pou Chen go up and down completely randomly.

Pair Corralation between Makalot Industrial and Pou Chen

Assuming the 90 days trading horizon Makalot Industrial Co is expected to generate 1.35 times more return on investment than Pou Chen. However, Makalot Industrial is 1.35 times more volatile than Pou Chen Corp. It trades about 0.04 of its potential returns per unit of risk. Pou Chen Corp is currently generating about 0.02 per unit of risk. If you would invest  23,050  in Makalot Industrial Co on September 29, 2024 and sell it today you would earn a total of  8,400  from holding Makalot Industrial Co or generate 36.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Makalot Industrial Co  vs.  Pou Chen Corp

Makalot Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makalot Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pou Chen Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pou Chen Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pou Chen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Makalot Industrial and Pou Chen

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

The idea behind Makalot Industrial Co and Pou Chen Corp 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..