Correlation Between Iron Force and Koge Micro
Can any of the company-specific risk be diversified away by investing in both Iron Force and Koge Micro 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 Iron Force and Koge Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Force Industrial and Koge Micro Tech, you can compare the effects of market volatilities on Iron Force and Koge Micro 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 Iron Force with a short position of Koge Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Force and Koge Micro.
Diversification Opportunities for Iron Force and Koge Micro
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iron and Koge is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Iron Force Industrial and Koge Micro Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koge Micro Tech and Iron Force 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 Iron Force Industrial are associated (or correlated) with Koge Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koge Micro Tech has no effect on the direction of Iron Force i.e., Iron Force and Koge Micro go up and down completely randomly.
Pair Corralation between Iron Force and Koge Micro
Assuming the 90 days trading horizon Iron Force Industrial is expected to under-perform the Koge Micro. In addition to that, Iron Force is 1.3 times more volatile than Koge Micro Tech. It trades about -0.04 of its total potential returns per unit of risk. Koge Micro Tech is currently generating about -0.02 per unit of volatility. If you would invest 5,370 in Koge Micro Tech on September 3, 2024 and sell it today you would lose (370.00) from holding Koge Micro Tech or give up 6.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Force Industrial vs. Koge Micro Tech
Performance |
| Timeline |
| Iron Force Industrial |
| Koge Micro Tech |
Iron Force and Koge Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Force and Koge Micro
The main advantage of trading using opposite Iron Force and Koge Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Force position performs unexpectedly, Koge Micro 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 Koge Micro will offset losses from the drop in Koge Micro's long position.| Iron Force vs. E Lead Electronic Co | Iron Force vs. Jentech Precision Industrial | Iron Force vs. Turvo International Co | Iron Force vs. Ruentex Development Co |
| Koge Micro vs. Cameo Communications | Koge Micro vs. Hannstar Display Corp | Koge Micro vs. Ching Feng Home | Koge Micro vs. Highlight Tech |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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