Correlation Between Simplo Technology and PChome Online

Can any of the company-specific risk be diversified away by investing in both Simplo Technology and PChome Online 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 Simplo Technology and PChome Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Simplo Technology and PChome Online

0.44

Correlation Coefficient

Simplo Technology  PChome Online

Very weak diversification

The 3 months correlation between Simplo and PChome is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Simplo Technology Co and PChome Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PChome Online and Simplo Technology 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 Simplo Technology Co are associated (or correlated) with PChome Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PChome Online has no effect on the direction of Simplo Technology i.e., Simplo Technology and PChome Online go up and down completely randomly.

Pair Corralation between Simplo Technology and PChome Online

Assuming the 90 days trading horizon Simplo Technology Co is expected to generate 0.84 times more return on investment than PChome Online. However, Simplo Technology Co is 1.19 times less risky than PChome Online. It trades about 0.12 of its potential returns per unit of risk. PChome Online is currently generating about 0.02 per unit of risk. If you would invest  36,500  in Simplo Technology Co on September 20, 2024 and sell it today you would earn a total of  2,400  from holding Simplo Technology Co or generate 6.58% return on investment over 90 days.

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

Simplo Technology Co  vs.  PChome Online

Simplo Technology

Risk-Adjusted Performance

4 of 100

Insignificant

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

PChome Online

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PChome Online are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PChome Online showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simplo Technology and PChome Online

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

The idea behind Simplo Technology Co and PChome Online 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.