Correlation Between Sunspring Metal and PChome Online

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

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

Diversification Opportunities for Sunspring Metal and PChome Online

-0.8

Correlation Coefficient

Sunspring Metal  PChome Online

Pay attention - limited upside

The 3 months correlation between Sunspring and PChome is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sunspring Metal Corp and PChome Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PChome Online and Sunspring Metal 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 Sunspring Metal 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 Sunspring Metal i.e., Sunspring Metal and PChome Online go up and down completely randomly.

Pair Corralation between Sunspring Metal and PChome Online

Assuming the 90 days trading horizon Sunspring Metal Corp is expected to generate 0.88 times more return on investment than PChome Online. However, Sunspring Metal Corp is 1.13 times less risky than PChome Online. It trades about 0.05 of its potential returns per unit of risk. PChome Online is currently generating about 0.01 per unit of risk. If you would invest  2,163  in Sunspring Metal Corp on September 20, 2024 and sell it today you would earn a total of  1,297  from holding Sunspring Metal Corp or generate 59.96% return on investment over 90 days.

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

Sunspring Metal Corp  vs.  PChome Online

Sunspring Metal Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunspring Metal Corp 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.

PChome Online

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PChome Online are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PChome Online showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunspring Metal and PChome Online

The main advantage of trading using opposite Sunspring Metal and PChome Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunspring Metal 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 Sunspring Metal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.