Correlation Between PChome Online and Kunyue Development

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

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

Diversification Opportunities for PChome Online and Kunyue Development

0.07

Correlation Coefficient

PChome Online  Kunyue Development

Significant diversification

The 3 months correlation between PChome and Kunyue is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PChome Online and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development 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 Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of PChome Online i.e., PChome Online and Kunyue Development go up and down completely randomly.

Pair Corralation between PChome Online and Kunyue Development

Assuming the 90 days trading horizon PChome Online is expected to under-perform the Kunyue Development. In addition to that, PChome Online is 3.15 times more volatile than Kunyue Development Co. It trades about -0.23 of its total potential returns per unit of risk. Kunyue Development Co is currently generating about -0.01 per unit of volatility. If you would invest  4,170  in Kunyue Development Co on September 27, 2024 and sell it today you would lose (15.00) from holding Kunyue Development Co or give up 0.36% of portfolio value over 90 days.

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

PChome Online  vs.  Kunyue Development Co

PChome Online

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PChome Online are ranked lower than 13 (%) 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.

Kunyue Development

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kunyue Development Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kunyue Development 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 Kunyue Development

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

The idea behind PChome Online and Kunyue Development 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 Stocks Directory module to find actively traded stocks across global markets.