Correlation Between PChome Online and Sunspring Metal

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

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

Diversification Opportunities for PChome Online and Sunspring Metal

0.61

Correlation Coefficient

PChome Online  Sunspring Metal

Poor diversification

The 3 months correlation between PChome and Sunspring is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PChome Online and Sunspring Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunspring Metal Corp and PChome Online 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 PChome Online are associated (or correlated) with Sunspring Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunspring Metal Corp has no effect on the direction of PChome Online i.e., PChome Online and Sunspring Metal go up and down completely randomly.

Pair Corralation between PChome Online and Sunspring Metal

Assuming the 90 days trading horizon PChome Online is expected to under-perform the Sunspring Metal. In addition to that, PChome Online is 1.09 times more volatile than Sunspring Metal Corp. It trades about -0.05 of its total potential returns per unit of risk. Sunspring Metal Corp is currently generating about 0.01 per unit of volatility. If you would invest  3,290  in Sunspring Metal Corp on December 11, 2024 and sell it today you would earn a total of  5.00  from holding Sunspring Metal Corp or generate 0.15% return on investment over 90 days.

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

PChome Online  vs.  Sunspring Metal Corp

PChome Online

Risk-Adjusted Performance

Very Weak

Over the last 90 days PChome Online 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.

Sunspring Metal Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunspring Metal Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sunspring Metal 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 PChome Online and Sunspring Metal

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

The idea behind PChome Online and Sunspring Metal Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.