Correlation Between Pou Chen and Mobiletron Electronics

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

By analyzing existing cross correlation between Pou Chen Corp and Mobiletron Electronics Co, you can compare the effects of market volatilities on Pou Chen and Mobiletron Electronics 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 Pou Chen with a short position of Mobiletron Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Mobiletron Electronics.

Diversification Opportunities for Pou Chen and Mobiletron Electronics

-0.2

Correlation Coefficient

Pou Chen  Mobiletron Electronics

Good diversification

The 3 months correlation between Pou and Mobiletron is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Mobiletron Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobiletron Electronics and Pou Chen 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 Pou Chen Corp are associated (or correlated) with Mobiletron Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobiletron Electronics has no effect on the direction of Pou Chen i.e., Pou Chen and Mobiletron Electronics go up and down completely randomly.

Pair Corralation between Pou Chen and Mobiletron Electronics

Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 0.74 times more return on investment than Mobiletron Electronics. However, Pou Chen Corp is 1.35 times less risky than Mobiletron Electronics. It trades about 0.03 of its potential returns per unit of risk. Mobiletron Electronics Co is currently generating about -0.01 per unit of risk. If you would invest  3,395  in Pou Chen Corp on September 25, 2024 and sell it today you would earn a total of  550.00  from holding Pou Chen Corp or generate 16.2% return on investment over 90 days.

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

Pou Chen Corp  vs.  Mobiletron Electronics Co

Pou Chen Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pou Chen Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pou Chen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mobiletron Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Pou Chen Corp and Mobiletron Electronics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.