Correlation Between Poya International and President Chain

Can any of the company-specific risk be diversified away by investing in both Poya International and President Chain 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 Poya International and President Chain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Poya International Co and President Chain Store, you can compare the effects of market volatilities on Poya International and President Chain 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 Poya International with a short position of President Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poya International and President Chain.

Diversification Opportunities for Poya International and President Chain

0.67

Correlation Coefficient

Poya International  President Chain

Poor diversification

The 3 months correlation between Poya and President is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Poya International Co and President Chain Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Chain Store and Poya International 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 Poya International Co are associated (or correlated) with President Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Chain Store has no effect on the direction of Poya International i.e., Poya International and President Chain go up and down completely randomly.

Pair Corralation between Poya International and President Chain

Assuming the 90 days trading horizon Poya International Co is expected to generate 0.81 times more return on investment than President Chain. However, Poya International Co is 1.23 times less risky than President Chain. It trades about -0.11 of its potential returns per unit of risk. President Chain Store is currently generating about -0.15 per unit of risk. If you would invest  51,900  in Poya International Co on October 23, 2024 and sell it today you would lose (3,300) from holding Poya International Co or give up 6.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Poya International Co  vs.  President Chain Store

Poya International

Risk-Adjusted Performance

0 of 100

Very Weak

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

President Chain Store

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Chain Store 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.

Pair Trading with Poya International and President Chain

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

The idea behind Poya International Co and President Chain Store 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.