Correlation Between Pou Chen and Chaun Choung

Can any of the company-specific risk be diversified away by investing in both Pou Chen and Chaun Choung 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 Chaun Choung 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 Chaun Choung Technology Corp, you can compare the effects of market volatilities on Pou Chen and Chaun Choung 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 Chaun Choung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Chaun Choung.

Diversification Opportunities for Pou Chen and Chaun Choung

-0.61

Correlation Coefficient

Pou Chen  Chaun Choung

Excellent diversification

The 3 months correlation between Pou and Chaun is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Chaun Choung Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaun Choung Technology 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 Chaun Choung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaun Choung Technology has no effect on the direction of Pou Chen i.e., Pou Chen and Chaun Choung go up and down completely randomly.

Pair Corralation between Pou Chen and Chaun Choung

Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 0.69 times more return on investment than Chaun Choung. However, Pou Chen Corp is 1.45 times less risky than Chaun Choung. It trades about 0.25 of its potential returns per unit of risk. Chaun Choung Technology Corp is currently generating about -0.06 per unit of risk. If you would invest  3,395  in Pou Chen Corp on September 12, 2024 and sell it today you would earn a total of  910.00  from holding Pou Chen Corp or generate 26.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Pou Chen Corp  vs.  Chaun Choung Technology Corp

Pou Chen Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pou Chen Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pou Chen showed solid returns over the last few months and may actually be approaching a breakup point.

Chaun Choung Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chaun Choung Technology Corp 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 Pou Chen and Chaun Choung

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

The idea behind Pou Chen Corp and Chaun Choung Technology Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.