Correlation Between Kaulin Mfg and AVY Precision
Can any of the company-specific risk be diversified away by investing in both Kaulin Mfg and AVY Precision 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 AVY Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaulin Mfg and AVY Precision Technology, you can compare the effects of market volatilities on Kaulin Mfg and AVY Precision 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 AVY Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaulin Mfg and AVY Precision.
Diversification Opportunities for Kaulin Mfg and AVY Precision
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kaulin and AVY is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kaulin Mfg and AVY Precision Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVY Precision Technology 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 AVY Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVY Precision Technology has no effect on the direction of Kaulin Mfg i.e., Kaulin Mfg and AVY Precision go up and down completely randomly.
Pair Corralation between Kaulin Mfg and AVY Precision
Assuming the 90 days trading horizon Kaulin Mfg is expected to generate 0.62 times more return on investment than AVY Precision. However, Kaulin Mfg is 1.61 times less risky than AVY Precision. It trades about 0.05 of its potential returns per unit of risk. AVY Precision Technology is currently generating about 0.03 per unit of risk. If you would invest 1,375 in Kaulin Mfg on September 4, 2024 and sell it today you would earn a total of 280.00 from holding Kaulin Mfg or generate 20.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaulin Mfg vs. AVY Precision Technology
Performance |
| Timeline |
| Kaulin Mfg |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| AVY Precision Technology |
Kaulin Mfg and AVY Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaulin Mfg and AVY Precision
The main advantage of trading using opposite Kaulin Mfg and AVY Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaulin Mfg position performs unexpectedly, AVY Precision 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 AVY Precision will offset losses from the drop in AVY Precision'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 |
| AVY Precision vs. Ability Enterprise Co | AVY Precision vs. XAC Automation | AVY Precision vs. Cheng Fwa Industrial | AVY Precision vs. Rich Development 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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