Correlation Between Yageo Corp and Kingstate Electronics
Can any of the company-specific risk be diversified away by investing in both Yageo Corp and Kingstate Electronics 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 Yageo Corp and Kingstate Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yageo Corp and Kingstate Electronics, you can compare the effects of market volatilities on Yageo Corp and Kingstate Electronics 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 Yageo Corp with a short position of Kingstate Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yageo Corp and Kingstate Electronics.
Diversification Opportunities for Yageo Corp and Kingstate Electronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yageo and Kingstate is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Kingstate Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstate Electronics and Yageo Corp 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 Yageo Corp are associated (or correlated) with Kingstate Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstate Electronics has no effect on the direction of Yageo Corp i.e., Yageo Corp and Kingstate Electronics go up and down completely randomly.
Pair Corralation between Yageo Corp and Kingstate Electronics
Assuming the 90 days trading horizon Yageo Corp is expected to generate 5.36 times less return on investment than Kingstate Electronics. In addition to that, Yageo Corp is 1.89 times more volatile than Kingstate Electronics. It trades about 0.0 of its total potential returns per unit of risk. Kingstate Electronics is currently generating about 0.03 per unit of volatility. If you would invest 4,260 in Kingstate Electronics on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Kingstate Electronics or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yageo Corp vs. Kingstate Electronics
Performance |
| Timeline |
| Yageo Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kingstate Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yageo Corp and Kingstate Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yageo Corp and Kingstate Electronics
The main advantage of trading using opposite Yageo Corp and Kingstate Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yageo Corp position performs unexpectedly, Kingstate Electronics 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 Kingstate Electronics will offset losses from the drop in Kingstate Electronics' long position.The idea behind Yageo Corp and Kingstate Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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