Correlation Between Powerchip Semiconductor and China Times

Can any of the company-specific risk be diversified away by investing in both Powerchip Semiconductor and China Times 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 Powerchip Semiconductor and China Times into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Powerchip Semiconductor Manufacturing and China Times Publishing, you can compare the effects of market volatilities on Powerchip Semiconductor and China Times 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 Powerchip Semiconductor with a short position of China Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powerchip Semiconductor and China Times.

Diversification Opportunities for Powerchip Semiconductor and China Times

-0.12

Correlation Coefficient

Powerchip Semiconductor  China Times

Good diversification

The 3 months correlation between Powerchip and China is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Powerchip Semiconductor Manufa and China Times Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Times Publishing and Powerchip Semiconductor 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 Powerchip Semiconductor Manufacturing are associated (or correlated) with China Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Times Publishing has no effect on the direction of Powerchip Semiconductor i.e., Powerchip Semiconductor and China Times go up and down completely randomly.

Pair Corralation between Powerchip Semiconductor and China Times

Assuming the 90 days trading horizon Powerchip Semiconductor Manufacturing is expected to under-perform the China Times. But the stock apears to be less risky and, when comparing its historical volatility, Powerchip Semiconductor Manufacturing is 2.03 times less risky than China Times. The stock trades about -0.08 of its potential returns per unit of risk. The China Times Publishing is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,139  in China Times Publishing on October 4, 2024 and sell it today you would lose (214.00) from holding China Times Publishing or give up 10.0% of portfolio value over 90 days.

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

Powerchip Semiconductor Manufa  vs.  China Times Publishing

Powerchip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powerchip Semiconductor Manufacturing 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

China Times Publishing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Times Publishing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, China Times may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Powerchip Semiconductor and China Times

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

The idea behind Powerchip Semiconductor Manufacturing and China Times Publishing 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.