Correlation Between Kaulin Mfg and Falcon Power
Can any of the company-specific risk be diversified away by investing in both Kaulin Mfg and Falcon Power 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 Kaulin Mfg and Falcon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaulin Mfg and Falcon Power Co, you can compare the effects of market volatilities on Kaulin Mfg and Falcon Power 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 Kaulin Mfg with a short position of Falcon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaulin Mfg and Falcon Power.
Diversification Opportunities for Kaulin Mfg and Falcon Power
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kaulin and Falcon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kaulin Mfg and Falcon Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Power and Kaulin Mfg 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 Kaulin Mfg are associated (or correlated) with Falcon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Power has no effect on the direction of Kaulin Mfg i.e., Kaulin Mfg and Falcon Power go up and down completely randomly.
Pair Corralation between Kaulin Mfg and Falcon Power
Assuming the 90 days trading horizon Kaulin Mfg is expected to generate 2.21 times more return on investment than Falcon Power. However, Kaulin Mfg is 2.21 times more volatile than Falcon Power Co. It trades about 0.12 of its potential returns per unit of risk. Falcon Power Co is currently generating about -0.08 per unit of risk. If you would invest 1,445 in Kaulin Mfg on August 29, 2024 and sell it today you would earn a total of 145.00 from holding Kaulin Mfg or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kaulin Mfg vs. Falcon Power Co
Performance |
| Timeline |
| Kaulin Mfg |
| Falcon Power |
Kaulin Mfg and Falcon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaulin Mfg and Falcon Power
The main advantage of trading using opposite Kaulin Mfg and Falcon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaulin Mfg position performs unexpectedly, Falcon Power 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 Falcon Power will offset losses from the drop in Falcon Power's long position.| Kaulin Mfg vs. Tainan Enterprises Co | Kaulin Mfg vs. Nien Hsing Textile | Kaulin Mfg vs. De Licacy Industrial | Kaulin Mfg vs. Kwong Fong Industries |
| Falcon Power vs. Yulon Motor Co | Falcon Power vs. Far Eastern Department | Falcon Power vs. China Steel Corp | Falcon Power vs. Chang Hwa Commercial |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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