Correlation Between Pou Chen and Nankang Rubber
Can any of the company-specific risk be diversified away by investing in both Pou Chen and Nankang Rubber 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 Nankang Rubber 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 Nankang Rubber Tire, you can compare the effects of market volatilities on Pou Chen and Nankang Rubber 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 Nankang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Nankang Rubber.
Diversification Opportunities for Pou Chen and Nankang Rubber
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pou and Nankang is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Nankang Rubber Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nankang Rubber Tire 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 Nankang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nankang Rubber Tire has no effect on the direction of Pou Chen i.e., Pou Chen and Nankang Rubber go up and down completely randomly.
Pair Corralation between Pou Chen and Nankang Rubber
Assuming the 90 days trading horizon Pou Chen is expected to generate 2.06 times less return on investment than Nankang Rubber. But when comparing it to its historical volatility, Pou Chen Corp is 1.2 times less risky than Nankang Rubber. It trades about 0.03 of its potential returns per unit of risk. Nankang Rubber Tire is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,310 in Nankang Rubber Tire on September 23, 2024 and sell it today you would earn a total of 1,300 from holding Nankang Rubber Tire or generate 39.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pou Chen Corp vs. Nankang Rubber Tire
Performance |
Timeline |
Pou Chen Corp |
Nankang Rubber Tire |
Pou Chen and Nankang Rubber Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pou Chen and Nankang Rubber
The main advantage of trading using opposite Pou Chen and Nankang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, Nankang Rubber 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 Nankang Rubber will offset losses from the drop in Nankang Rubber's long position.Pou Chen vs. Uni President Enterprises Corp | Pou Chen vs. Cheng Shin Rubber | Pou Chen vs. Far Eastern New | Pou Chen vs. Formosa Chemicals Fibre |
Nankang Rubber vs. Merida Industry Co | Nankang Rubber vs. Cheng Shin Rubber | Nankang Rubber vs. Uni President Enterprises Corp | Nankang Rubber vs. Pou Chen Corp |
Check out your portfolio center.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |