Correlation Between Kaimei Electronic and INPAQ Technology
Can any of the company-specific risk be diversified away by investing in both Kaimei Electronic and INPAQ Technology 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 Kaimei Electronic and INPAQ Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaimei Electronic Corp and INPAQ Technology Co, you can compare the effects of market volatilities on Kaimei Electronic and INPAQ Technology 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 Kaimei Electronic with a short position of INPAQ Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaimei Electronic and INPAQ Technology.
Diversification Opportunities for Kaimei Electronic and INPAQ Technology
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kaimei and INPAQ is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kaimei Electronic Corp and INPAQ Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INPAQ Technology and Kaimei Electronic 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 Kaimei Electronic Corp are associated (or correlated) with INPAQ Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INPAQ Technology has no effect on the direction of Kaimei Electronic i.e., Kaimei Electronic and INPAQ Technology go up and down completely randomly.
Pair Corralation between Kaimei Electronic and INPAQ Technology
Assuming the 90 days trading horizon Kaimei Electronic Corp is expected to generate 1.31 times more return on investment than INPAQ Technology. However, Kaimei Electronic is 1.31 times more volatile than INPAQ Technology Co. It trades about 0.15 of its potential returns per unit of risk. INPAQ Technology Co is currently generating about -0.03 per unit of risk. If you would invest 6,390 in Kaimei Electronic Corp on September 2, 2024 and sell it today you would earn a total of 440.00 from holding Kaimei Electronic Corp or generate 6.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaimei Electronic Corp vs. INPAQ Technology Co
Performance |
| Timeline |
| Kaimei Electronic Corp |
| INPAQ Technology |
Kaimei Electronic and INPAQ Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaimei Electronic and INPAQ Technology
The main advantage of trading using opposite Kaimei Electronic and INPAQ Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaimei Electronic position performs unexpectedly, INPAQ Technology 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 INPAQ Technology will offset losses from the drop in INPAQ Technology's long position.The idea behind Kaimei Electronic Corp and INPAQ Technology Co 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.| INPAQ Technology vs. Hon Hai Precision | INPAQ Technology vs. Delta Electronics | INPAQ Technology vs. LARGAN Precision Co | INPAQ Technology vs. Yageo 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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