Correlation Between Pou Chen and CTCI Corp

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

Diversification Opportunities for Pou Chen and CTCI Corp

0.12

Correlation Coefficient

Pou Chen  CTCI Corp

Average diversification

The 3 months correlation between Pou and CTCI is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and CTCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTCI Corp 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 CTCI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTCI Corp has no effect on the direction of Pou Chen i.e., Pou Chen and CTCI Corp go up and down completely randomly.

Pair Corralation between Pou Chen and CTCI Corp

Assuming the 90 days trading horizon Pou Chen Corp is expected to under-perform the CTCI Corp. In addition to that, Pou Chen is 1.79 times more volatile than CTCI Corp. It trades about -0.06 of its total potential returns per unit of risk. CTCI Corp is currently generating about 0.11 per unit of volatility. If you would invest  3,900  in CTCI Corp on December 29, 2024 and sell it today you would earn a total of  215.00  from holding CTCI Corp or generate 5.51% 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.  CTCI Corp

Pou Chen Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pou Chen Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pou Chen is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CTCI Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTCI Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CTCI Corp 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 CTCI Corp

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

The idea behind Pou Chen Corp and CTCI 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.