Correlation Between King Slide and Kao Fong
Can any of the company-specific risk be diversified away by investing in both King Slide and Kao 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 King Slide and Kao Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between King Slide Works and Kao Fong Machinery, you can compare the effects of market volatilities on King Slide and Kao 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 King Slide with a short position of Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of King Slide and Kao Fong.
Diversification Opportunities for King Slide and Kao Fong
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between King and Kao is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding King Slide Works and Kao Fong Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kao Fong Machinery and King Slide 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 King Slide Works are associated (or correlated) with Kao Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kao Fong Machinery has no effect on the direction of King Slide i.e., King Slide and Kao Fong go up and down completely randomly.
Pair Corralation between King Slide and Kao Fong
Assuming the 90 days trading horizon King Slide is expected to generate 1.05 times less return on investment than Kao Fong. But when comparing it to its historical volatility, King Slide Works is 1.08 times less risky than Kao Fong. It trades about 0.12 of its potential returns per unit of risk. Kao Fong Machinery is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,119 in Kao Fong Machinery on December 1, 2024 and sell it today you would earn a total of 4,951 from holding Kao Fong Machinery or generate 442.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
King Slide Works vs. Kao Fong Machinery
Performance |
| Timeline |
| King Slide Works |
| Kao Fong Machinery |
King Slide and Kao Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with King Slide and Kao Fong
The main advantage of trading using opposite King Slide and Kao Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Slide position performs unexpectedly, Kao 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 Kao Fong will offset losses from the drop in Kao Fong's long position.| King Slide vs. Eclat Textile Co | King Slide vs. Advantech Co | King Slide vs. Chicony Electronics Co | King Slide vs. Merida Industry Co |
| Kao Fong vs. Microelectronics Technology | Kao Fong vs. Arbor Technology | Kao Fong vs. General Plastic Industrial | Kao Fong vs. Univacco Technology |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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