Correlation Between Nien Hsing and Kwong Fong
Can any of the company-specific risk be diversified away by investing in both Nien Hsing and Kwong Fong 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 Nien Hsing and Kwong Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nien Hsing Textile and Kwong Fong Industries, you can compare the effects of market volatilities on Nien Hsing and Kwong Fong 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 Nien Hsing with a short position of Kwong Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nien Hsing and Kwong Fong.
Diversification Opportunities for Nien Hsing and Kwong Fong
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nien and Kwong is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nien Hsing Textile and Kwong Fong Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwong Fong Industries and Nien Hsing 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 Nien Hsing Textile are associated (or correlated) with Kwong Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwong Fong Industries has no effect on the direction of Nien Hsing i.e., Nien Hsing and Kwong Fong go up and down completely randomly.
Pair Corralation between Nien Hsing and Kwong Fong
Assuming the 90 days trading horizon Nien Hsing Textile is expected to generate 0.67 times more return on investment than Kwong Fong. However, Nien Hsing Textile is 1.49 times less risky than Kwong Fong. It trades about 0.2 of its potential returns per unit of risk. Kwong Fong Industries is currently generating about -0.21 per unit of risk. If you would invest 1,995 in Nien Hsing Textile on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Nien Hsing Textile or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nien Hsing Textile vs. Kwong Fong Industries
Performance |
| Timeline |
| Nien Hsing Textile |
| Kwong Fong Industries |
Nien Hsing and Kwong Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nien Hsing and Kwong Fong
The main advantage of trading using opposite Nien Hsing and Kwong Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nien Hsing position performs unexpectedly, Kwong Fong 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 Kwong Fong will offset losses from the drop in Kwong Fong's long position.| Nien Hsing vs. Tainan Enterprises Co | Nien Hsing vs. De Licacy Industrial | Nien Hsing vs. Taiwan Styrene Monomer | Nien Hsing vs. Kaulin Mfg |
| Kwong Fong vs. Chaintech Technology Corp | Kwong Fong vs. AVerMedia Technologies | Kwong Fong vs. Avision | Kwong Fong vs. Clevo 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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