Correlation Between Champion Building and Kinko Optical
Can any of the company-specific risk be diversified away by investing in both Champion Building and Kinko Optical 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 Champion Building and Kinko Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Building Materials and Kinko Optical Co, you can compare the effects of market volatilities on Champion Building and Kinko Optical 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 Champion Building with a short position of Kinko Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Building and Kinko Optical.
Diversification Opportunities for Champion Building and Kinko Optical
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Champion and Kinko is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Champion Building Materials and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical and Champion Building 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 Champion Building Materials are associated (or correlated) with Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Champion Building i.e., Champion Building and Kinko Optical go up and down completely randomly.
Pair Corralation between Champion Building and Kinko Optical
Assuming the 90 days trading horizon Champion Building Materials is expected to generate 1.18 times more return on investment than Kinko Optical. However, Champion Building is 1.18 times more volatile than Kinko Optical Co. It trades about 0.13 of its potential returns per unit of risk. Kinko Optical Co is currently generating about -0.08 per unit of risk. If you would invest 996.00 in Champion Building Materials on September 1, 2024 and sell it today you would earn a total of 44.00 from holding Champion Building Materials or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Champion Building Materials vs. Kinko Optical Co
Performance |
| Timeline |
| Champion Building |
| Kinko Optical |
Champion Building and Kinko Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Building and Kinko Optical
The main advantage of trading using opposite Champion Building and Kinko Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Building position performs unexpectedly, Kinko Optical 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 Kinko Optical will offset losses from the drop in Kinko Optical's long position.| Champion Building vs. China Glaze Co | Champion Building vs. Chung Hwa Pulp | Champion Building vs. Taiwan Glass Ind | Champion Building vs. China Man Made Fiber |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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