Correlation Between Paiho Shih and Victory New

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

By analyzing existing cross correlation between Paiho Shih Holdings and Victory New Materials, you can compare the effects of market volatilities on Paiho Shih and Victory New 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 Paiho Shih with a short position of Victory New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paiho Shih and Victory New.

Diversification Opportunities for Paiho Shih and Victory New

-0.13

Correlation Coefficient

Paiho Shih  Victory New

Good diversification

The 3 months correlation between Paiho and Victory is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Paiho Shih Holdings and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials and Paiho Shih 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 Paiho Shih Holdings are associated (or correlated) with Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of Paiho Shih i.e., Paiho Shih and Victory New go up and down completely randomly.

Pair Corralation between Paiho Shih and Victory New

Assuming the 90 days trading horizon Paiho Shih Holdings is expected to under-perform the Victory New. In addition to that, Paiho Shih is 3.89 times more volatile than Victory New Materials. It trades about -0.28 of its total potential returns per unit of risk. Victory New Materials is currently generating about -0.36 per unit of volatility. If you would invest  994.00  in Victory New Materials on September 27, 2024 and sell it today you would lose (45.00) from holding Victory New Materials or give up 4.53% of portfolio value over 90 days.

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

Paiho Shih Holdings  vs.  Victory New Materials

Paiho Shih Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paiho Shih Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Paiho Shih showed solid returns over the last few months and may actually be approaching a breakup point.

Victory New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory New Materials 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.

Pair Trading with Paiho Shih and Victory New

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

The idea behind Paiho Shih Holdings and Victory New Materials 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.