Correlation Between Perfect Corp and CoreCard Corp

Can any of the company-specific risk be diversified away by investing in both Perfect Corp and CoreCard 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 Perfect Corp and CoreCard Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perfect Corp and CoreCard Corp, you can compare the effects of market volatilities on Perfect Corp and CoreCard 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 Perfect Corp with a short position of CoreCard Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perfect Corp and CoreCard Corp.

Diversification Opportunities for Perfect Corp and CoreCard Corp

0.67

Correlation Coefficient

Perfect Corp  CoreCard Corp

Poor diversification

The 3 months correlation between Perfect and CoreCard is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Perfect Corp and CoreCard Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCard Corp and Perfect Corp 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 Perfect Corp are associated (or correlated) with CoreCard Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCard Corp has no effect on the direction of Perfect Corp i.e., Perfect Corp and CoreCard Corp go up and down completely randomly.

Pair Corralation between Perfect Corp and CoreCard Corp

Given the investment horizon of 90 days Perfect Corp is expected to generate 2.59 times more return on investment than CoreCard Corp. However, Perfect Corp is 2.59 times more volatile than CoreCard Corp. It trades about 0.0 of its potential returns per unit of risk. CoreCard Corp is currently generating about 0.0 per unit of risk. If you would invest  226.00  in Perfect Corp on December 21, 2024 and sell it today you would lose (35.00) from holding Perfect Corp or give up 15.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Perfect Corp  vs.  CoreCard Corp

Perfect Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perfect Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perfect Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CoreCard Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CoreCard Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CoreCard Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Perfect Corp and CoreCard Corp

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

The idea behind Perfect Corp and CoreCard 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.