Correlation Between Kwong Fong and Sunspring Metal
Can any of the company-specific risk be diversified away by investing in both Kwong Fong and Sunspring Metal 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 Kwong Fong and Sunspring Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kwong Fong Industries and Sunspring Metal Corp, you can compare the effects of market volatilities on Kwong Fong and Sunspring Metal 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 Kwong Fong with a short position of Sunspring Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwong Fong and Sunspring Metal.
Diversification Opportunities for Kwong Fong and Sunspring Metal
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kwong and Sunspring is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kwong Fong Industries and Sunspring Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunspring Metal Corp and Kwong Fong 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 Kwong Fong Industries are associated (or correlated) with Sunspring Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunspring Metal Corp has no effect on the direction of Kwong Fong i.e., Kwong Fong and Sunspring Metal go up and down completely randomly.
Pair Corralation between Kwong Fong and Sunspring Metal
Assuming the 90 days trading horizon Kwong Fong is expected to generate 2.05 times less return on investment than Sunspring Metal. But when comparing it to its historical volatility, Kwong Fong Industries is 1.38 times less risky than Sunspring Metal. It trades about 0.04 of its potential returns per unit of risk. Sunspring Metal Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,153 in Sunspring Metal Corp on September 3, 2024 and sell it today you would earn a total of 1,172 from holding Sunspring Metal Corp or generate 54.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Kwong Fong Industries vs. Sunspring Metal Corp
Performance |
| Timeline |
| Kwong Fong Industries |
| Sunspring Metal Corp |
Kwong Fong and Sunspring Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwong Fong and Sunspring Metal
The main advantage of trading using opposite Kwong Fong and Sunspring Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwong Fong position performs unexpectedly, Sunspring Metal 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 Sunspring Metal will offset losses from the drop in Sunspring Metal's long position.| Kwong Fong vs. Integrated Service Technology | Kwong Fong vs. Founding Construction Development | Kwong Fong vs. Arbor Technology | Kwong Fong vs. Asmedia Technology |
| Sunspring Metal vs. Universal Microelectronics Co | Sunspring Metal vs. AVerMedia Technologies | Sunspring Metal vs. Symtek Automation Asia | Sunspring Metal vs. WiseChip Semiconductor |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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