Correlation Between Cayman Engley and Pou Chen

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

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

Diversification Opportunities for Cayman Engley and Pou Chen

0.49

Correlation Coefficient

Cayman Engley  Pou Chen

Very weak diversification

The 3 months correlation between Cayman and Pou is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cayman Engley Industrial 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 Cayman Engley 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 Cayman Engley Industrial 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 Cayman Engley i.e., Cayman Engley and Pou Chen go up and down completely randomly.

Pair Corralation between Cayman Engley and Pou Chen

Assuming the 90 days trading horizon Cayman Engley Industrial is expected to generate 1.14 times more return on investment than Pou Chen. However, Cayman Engley is 1.14 times more volatile than Pou Chen Corp. It trades about 0.06 of its potential returns per unit of risk. Pou Chen Corp is currently generating about -0.04 per unit of risk. If you would invest  3,515  in Cayman Engley Industrial on December 26, 2024 and sell it today you would earn a total of  185.00  from holding Cayman Engley Industrial or generate 5.26% return on investment over 90 days.

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

Cayman Engley Industrial  vs.  Pou Chen Corp

Cayman Engley Industrial

Risk-Adjusted Performance

Insignificant

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

Pou Chen Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cayman Engley and Pou Chen

The main advantage of trading using opposite Cayman Engley and Pou Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cayman Engley 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 Cayman Engley Industrial 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.