Correlation Between Kwong Fong and Chaintech Technology
Can any of the company-specific risk be diversified away by investing in both Kwong Fong and Chaintech Technology 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 Chaintech Technology 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 Chaintech Technology Corp, you can compare the effects of market volatilities on Kwong Fong and Chaintech Technology 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 Chaintech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwong Fong and Chaintech Technology.
Diversification Opportunities for Kwong Fong and Chaintech Technology
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kwong and Chaintech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kwong Fong Industries and Chaintech Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaintech Technology 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 Chaintech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaintech Technology Corp has no effect on the direction of Kwong Fong i.e., Kwong Fong and Chaintech Technology go up and down completely randomly.
Pair Corralation between Kwong Fong and Chaintech Technology
Assuming the 90 days trading horizon Kwong Fong Industries is expected to generate 0.74 times more return on investment than Chaintech Technology. However, Kwong Fong Industries is 1.35 times less risky than Chaintech Technology. It trades about -0.19 of its potential returns per unit of risk. Chaintech Technology Corp is currently generating about -0.37 per unit of risk. If you would invest 1,375 in Kwong Fong Industries on August 31, 2024 and sell it today you would lose (85.00) from holding Kwong Fong Industries or give up 6.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kwong Fong Industries vs. Chaintech Technology Corp
Performance |
| Timeline |
| Kwong Fong Industries |
| Chaintech Technology Corp |
Kwong Fong and Chaintech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwong Fong and Chaintech Technology
The main advantage of trading using opposite Kwong Fong and Chaintech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwong Fong position performs unexpectedly, Chaintech Technology 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 Chaintech Technology will offset losses from the drop in Chaintech Technology's long position.| Kwong Fong vs. Chaintech Technology Corp | Kwong Fong vs. AVerMedia Technologies | Kwong Fong vs. Avision | Kwong Fong vs. Clevo Co |
| Chaintech Technology vs. Biostar Microtech International | Chaintech Technology vs. Elitegroup Computer Systems | Chaintech Technology vs. Shuttle | Chaintech Technology vs. Gigabyte Technology Co |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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