Correlation Between Avision and Kenda Rubber
Can any of the company-specific risk be diversified away by investing in both Avision and Kenda Rubber 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 Avision and Kenda Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avision and Kenda Rubber Industrial, you can compare the effects of market volatilities on Avision and Kenda Rubber 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 Avision with a short position of Kenda Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avision and Kenda Rubber.
Diversification Opportunities for Avision and Kenda Rubber
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avision and Kenda is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Avision and Kenda Rubber Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenda Rubber Industrial and Avision 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 Avision are associated (or correlated) with Kenda Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenda Rubber Industrial has no effect on the direction of Avision i.e., Avision and Kenda Rubber go up and down completely randomly.
Pair Corralation between Avision and Kenda Rubber
Assuming the 90 days trading horizon Avision is expected to under-perform the Kenda Rubber. In addition to that, Avision is 1.61 times more volatile than Kenda Rubber Industrial. It trades about -0.05 of its total potential returns per unit of risk. Kenda Rubber Industrial is currently generating about -0.02 per unit of volatility. If you would invest 3,140 in Kenda Rubber Industrial on September 2, 2024 and sell it today you would lose (265.00) from holding Kenda Rubber Industrial or give up 8.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avision vs. Kenda Rubber Industrial
Performance |
| Timeline |
| Avision |
| Kenda Rubber Industrial |
Avision and Kenda Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avision and Kenda Rubber
The main advantage of trading using opposite Avision and Kenda Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avision position performs unexpectedly, Kenda Rubber 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 Kenda Rubber will offset losses from the drop in Kenda Rubber's long position.The idea behind Avision and Kenda Rubber Industrial 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.| Kenda Rubber vs. Chaintech Technology Corp | Kenda Rubber vs. Avision | Kenda Rubber vs. Clevo Co | Kenda Rubber vs. Elitegroup Computer Systems |
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 Stocks Directory module to find actively traded stocks across global markets.
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