Correlation Between Pegatron Corp and Ten Ren

Can any of the company-specific risk be diversified away by investing in both Pegatron Corp and Ten Ren 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 Pegatron Corp and Ten Ren into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Pegatron Corp and Ten Ren

0.78

Correlation Coefficient

Pegatron Corp  Ten Ren

Poor diversification

The 3 months correlation between Pegatron and Ten is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pegatron Corp and Ten Ren Tea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ten Ren Tea and Pegatron Corp 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 Pegatron Corp are associated (or correlated) with Ten Ren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ten Ren Tea has no effect on the direction of Pegatron Corp i.e., Pegatron Corp and Ten Ren go up and down completely randomly.

Pair Corralation between Pegatron Corp and Ten Ren

Assuming the 90 days trading horizon Pegatron Corp is expected to generate 2.06 times more return on investment than Ten Ren. However, Pegatron Corp is 2.06 times more volatile than Ten Ren Tea. It trades about 0.14 of its potential returns per unit of risk. Ten Ren Tea is currently generating about 0.07 per unit of risk. If you would invest  9,280  in Pegatron Corp on October 26, 2024 and sell it today you would earn a total of  390.00  from holding Pegatron Corp or generate 4.2% return on investment over 90 days.

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

Pegatron Corp  vs.  Ten Ren Tea

Pegatron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ten Ren Tea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ten Ren Tea has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ten Ren 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 Pegatron Corp and Ten Ren

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

The idea behind Pegatron Corp and Ten Ren Tea 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.