Correlation Between Kinpo Electronics and Cheng Uei
Can any of the company-specific risk be diversified away by investing in both Kinpo Electronics and Cheng Uei 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 Kinpo Electronics and Cheng Uei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinpo Electronics and Cheng Uei Precision, you can compare the effects of market volatilities on Kinpo Electronics and Cheng Uei 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 Kinpo Electronics with a short position of Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinpo Electronics and Cheng Uei.
Diversification Opportunities for Kinpo Electronics and Cheng Uei
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinpo and Cheng is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kinpo Electronics and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision and Kinpo Electronics 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 Kinpo Electronics are associated (or correlated) with Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of Kinpo Electronics i.e., Kinpo Electronics and Cheng Uei go up and down completely randomly.
Pair Corralation between Kinpo Electronics and Cheng Uei
Assuming the 90 days trading horizon Kinpo Electronics is expected to generate 11.0 times less return on investment than Cheng Uei. But when comparing it to its historical volatility, Kinpo Electronics is 1.1 times less risky than Cheng Uei. It trades about 0.01 of its potential returns per unit of risk. Cheng Uei Precision is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,160 in Cheng Uei Precision on October 26, 2024 and sell it today you would earn a total of 690.00 from holding Cheng Uei Precision or generate 11.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinpo Electronics vs. Cheng Uei Precision
Performance |
| Timeline |
| Kinpo Electronics |
| Cheng Uei Precision |
Kinpo Electronics and Cheng Uei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinpo Electronics and Cheng Uei
The main advantage of trading using opposite Kinpo Electronics and Cheng Uei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinpo Electronics position performs unexpectedly, Cheng Uei 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 Cheng Uei will offset losses from the drop in Cheng Uei's long position.| Kinpo Electronics vs. Tong Yang Industry | Kinpo Electronics vs. Ta Yih Industrial | Kinpo Electronics vs. Basso Industry Corp | Kinpo Electronics vs. China Motor Corp |
| Cheng Uei vs. Inventec Corp | Cheng Uei vs. Compal Electronics | Cheng Uei vs. Ichia Technologies | Cheng Uei vs. Pan International Industrial Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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