Correlation Between PChome Online and EirGenix

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

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

Diversification Opportunities for PChome Online and EirGenix

0.57

Correlation Coefficient

PChome Online  EirGenix

Very weak diversification

The 3 months correlation between PChome and EirGenix is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding PChome Online and EirGenix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EirGenix 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 EirGenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EirGenix has no effect on the direction of PChome Online i.e., PChome Online and EirGenix go up and down completely randomly.

Pair Corralation between PChome Online and EirGenix

Assuming the 90 days trading horizon PChome Online is expected to generate 1.74 times more return on investment than EirGenix. However, PChome Online is 1.74 times more volatile than EirGenix. It trades about 0.25 of its potential returns per unit of risk. EirGenix is currently generating about -0.04 per unit of risk. If you would invest  2,965  in PChome Online on September 12, 2024 and sell it today you would earn a total of  2,405  from holding PChome Online or generate 81.11% return on investment over 90 days.

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

PChome Online  vs.  EirGenix

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.

EirGenix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EirGenix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EirGenix 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 EirGenix

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

The idea behind PChome Online and EirGenix 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.