Correlation Between Kwong Fong and Information Technology
Can any of the company-specific risk be diversified away by investing in both Kwong Fong and Information 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 Information 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 Information Technology Total, you can compare the effects of market volatilities on Kwong Fong and Information 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 Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwong Fong and Information Technology.
Diversification Opportunities for Kwong Fong and Information Technology
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kwong and Information is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kwong Fong Industries and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology 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 Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Kwong Fong i.e., Kwong Fong and Information Technology go up and down completely randomly.
Pair Corralation between Kwong Fong and Information Technology
Assuming the 90 days trading horizon Kwong Fong Industries is expected to under-perform the Information Technology. But the stock apears to be less risky and, when comparing its historical volatility, Kwong Fong Industries is 2.2 times less risky than Information Technology. The stock trades about -0.13 of its potential returns per unit of risk. The Information Technology Total is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,710 in Information Technology Total on August 27, 2024 and sell it today you would lose (140.00) from holding Information Technology Total or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kwong Fong Industries vs. Information Technology Total
Performance |
| Timeline |
| Kwong Fong Industries |
| Information Technology |
Kwong Fong and Information Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwong Fong and Information Technology
The main advantage of trading using opposite Kwong Fong and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwong Fong position performs unexpectedly, Information 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 Information Technology will offset losses from the drop in Information Technology's long position.| Kwong Fong vs. Taiwan Semiconductor Manufacturing | Kwong Fong vs. Hon Hai Precision | Kwong Fong vs. MediaTek | Kwong Fong vs. Chunghwa Telecom Co |
| Information Technology vs. Acer E Enabling Service | Information Technology vs. Sysage Technology Co | Information Technology vs. Syscom Computer Engineering | Information Technology vs. Jetwell Computer 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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