Correlation Between Pou Chen and Fulgent Sun

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

Diversification Opportunities for Pou Chen and Fulgent Sun

-0.55

Correlation Coefficient

Pou Chen  Fulgent Sun

Excellent diversification

The 3 months correlation between Pou and Fulgent is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Fulgent Sun International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulgent Sun International 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 Fulgent Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulgent Sun International has no effect on the direction of Pou Chen i.e., Pou Chen and Fulgent Sun go up and down completely randomly.

Pair Corralation between Pou Chen and Fulgent Sun

Assuming the 90 days trading horizon Pou Chen is expected to generate 405.58 times less return on investment than Fulgent Sun. But when comparing it to its historical volatility, Pou Chen Corp is 1.5 times less risky than Fulgent Sun. It trades about 0.0 of its potential returns per unit of risk. Fulgent Sun International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  11,100  in Fulgent Sun International on September 15, 2024 and sell it today you would earn a total of  1,150  from holding Fulgent Sun International or generate 10.36% return on investment over 90 days.

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

Pou Chen Corp  vs.  Fulgent Sun International

Pou Chen Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pou Chen Corp are ranked lower than 16 (%) 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.

Fulgent Sun International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fulgent Sun International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fulgent Sun may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pou Chen and Fulgent Sun

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

The idea behind Pou Chen Corp and Fulgent Sun International 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.