Correlation Between Pou Chen and First Hotel
Can any of the company-specific risk be diversified away by investing in both Pou Chen and First Hotel 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 First Hotel 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 First Hotel Co, you can compare the effects of market volatilities on Pou Chen and First Hotel 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 First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and First Hotel.
Diversification Opportunities for Pou Chen and First Hotel
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pou and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel 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 First Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hotel has no effect on the direction of Pou Chen i.e., Pou Chen and First Hotel go up and down completely randomly.
Pair Corralation between Pou Chen and First Hotel
Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 1.16 times more return on investment than First Hotel. However, Pou Chen is 1.16 times more volatile than First Hotel Co. It trades about 0.03 of its potential returns per unit of risk. First Hotel Co is currently generating about 0.01 per unit of risk. If you would invest 3,350 in Pou Chen Corp on September 26, 2024 and sell it today you would earn a total of 530.00 from holding Pou Chen Corp or generate 15.82% 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. First Hotel Co
Performance |
Timeline |
Pou Chen Corp |
First Hotel |
Pou Chen and First Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pou Chen and First Hotel
The main advantage of trading using opposite Pou Chen and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen position performs unexpectedly, First Hotel 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 First Hotel will offset losses from the drop in First Hotel's long position.Pou Chen vs. Merida Industry Co | Pou Chen vs. Cheng Shin Rubber | Pou Chen vs. Uni President Enterprises Corp |
First Hotel vs. Merida Industry Co | First Hotel vs. Cheng Shin Rubber | First Hotel vs. Uni President Enterprises Corp | First Hotel 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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