Correlation Between Powertech Industrial and Chaheng Precision

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

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

Diversification Opportunities for Powertech Industrial and Chaheng Precision

-0.3

Correlation Coefficient

Powertech Industrial  Chaheng Precision

Very good diversification

The 3 months correlation between Powertech and Chaheng is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial Co and Chaheng Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaheng Precision and Powertech 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 Powertech Industrial Co are associated (or correlated) with Chaheng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaheng Precision has no effect on the direction of Powertech Industrial i.e., Powertech Industrial and Chaheng Precision go up and down completely randomly.

Pair Corralation between Powertech Industrial and Chaheng Precision

Assuming the 90 days trading horizon Powertech Industrial Co is expected to under-perform the Chaheng Precision. In addition to that, Powertech Industrial is 1.39 times more volatile than Chaheng Precision Co. It trades about -0.21 of its total potential returns per unit of risk. Chaheng Precision Co is currently generating about 0.1 per unit of volatility. If you would invest  9,140  in Chaheng Precision Co on December 25, 2024 and sell it today you would earn a total of  660.00  from holding Chaheng Precision Co or generate 7.22% return on investment over 90 days.

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

Powertech Industrial Co  vs.  Chaheng Precision Co

Powertech Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powertech Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Chaheng Precision

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chaheng Precision Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chaheng Precision may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Powertech Industrial and Chaheng Precision

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

The idea behind Powertech Industrial Co and Chaheng Precision Co 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..