Correlation Between Pegatron Corp and Concraft Holding

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

By analyzing existing cross correlation between Pegatron Corp and Concraft Holding Co, you can compare the effects of market volatilities on Pegatron Corp and Concraft Holding 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 Concraft Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pegatron Corp and Concraft Holding.

Diversification Opportunities for Pegatron Corp and Concraft Holding

0.84

Correlation Coefficient

Pegatron Corp  Concraft Holding

Very poor diversification

The 3 months correlation between Pegatron and Concraft is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pegatron Corp and Concraft Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concraft Holding 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 Concraft Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concraft Holding has no effect on the direction of Pegatron Corp i.e., Pegatron Corp and Concraft Holding go up and down completely randomly.

Pair Corralation between Pegatron Corp and Concraft Holding

Assuming the 90 days trading horizon Pegatron Corp is expected to generate 3.55 times less return on investment than Concraft Holding. But when comparing it to its historical volatility, Pegatron Corp is 1.89 times less risky than Concraft Holding. It trades about 0.14 of its potential returns per unit of risk. Concraft Holding Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,430  in Concraft Holding Co on October 26, 2024 and sell it today you would earn a total of  225.00  from holding Concraft Holding Co or generate 15.73% return on investment over 90 days.

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

Pegatron Corp  vs.  Concraft Holding Co

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.

Concraft Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concraft Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Concraft Holding 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 Concraft Holding

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

The idea behind Pegatron Corp and Concraft Holding 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.

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