Correlation Between Microelectronics and Kao Fong
Can any of the company-specific risk be diversified away by investing in both Microelectronics 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 Microelectronics and Kao Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microelectronics Technology and Kao Fong Machinery, you can compare the effects of market volatilities on Microelectronics 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 Microelectronics with a short position of Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microelectronics and Kao Fong.
Diversification Opportunities for Microelectronics and Kao Fong
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microelectronics and Kao is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology 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 Microelectronics 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 Microelectronics Technology 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 Microelectronics i.e., Microelectronics and Kao Fong go up and down completely randomly.
Pair Corralation between Microelectronics and Kao Fong
Assuming the 90 days trading horizon Microelectronics is expected to generate 55.25 times less return on investment than Kao Fong. But when comparing it to its historical volatility, Microelectronics Technology is 1.79 times less risky than Kao Fong. It trades about 0.01 of its potential returns per unit of risk. Kao Fong Machinery is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,650 in Kao Fong Machinery on September 3, 2024 and sell it today you would earn a total of 3,035 from holding Kao Fong Machinery or generate 183.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microelectronics Technology vs. Kao Fong Machinery
Performance |
| Timeline |
| Microelectronics Tec |
| Kao Fong Machinery |
Microelectronics and Kao Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microelectronics and Kao Fong
The main advantage of trading using opposite Microelectronics and Kao Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microelectronics 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.| Microelectronics vs. Taiwan Semiconductor Manufacturing | Microelectronics vs. Yang Ming Marine | Microelectronics vs. ASE Industrial Holding | Microelectronics vs. AU Optronics |
| Kao Fong vs. Airtac International Group | Kao Fong vs. TECO Electric Machinery | Kao Fong vs. Chung Hsin Electric Machinery | Kao Fong vs. Ruentex 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |