Correlation Between Advantech and Kinko Optical
Can any of the company-specific risk be diversified away by investing in both Advantech and Kinko Optical 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 Advantech and Kinko Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantech Co and Kinko Optical Co, you can compare the effects of market volatilities on Advantech and Kinko Optical 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 Advantech with a short position of Kinko Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantech and Kinko Optical.
Diversification Opportunities for Advantech and Kinko Optical
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Advantech and Kinko is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Advantech Co and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical and Advantech 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 Advantech Co are associated (or correlated) with Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Advantech i.e., Advantech and Kinko Optical go up and down completely randomly.
Pair Corralation between Advantech and Kinko Optical
Assuming the 90 days trading horizon Advantech Co is expected to generate 1.24 times more return on investment than Kinko Optical. However, Advantech is 1.24 times more volatile than Kinko Optical Co. It trades about -0.03 of its potential returns per unit of risk. Kinko Optical Co is currently generating about -0.07 per unit of risk. If you would invest 34,800 in Advantech Co on September 3, 2024 and sell it today you would lose (1,250) from holding Advantech Co or give up 3.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantech Co vs. Kinko Optical Co
Performance |
| Timeline |
| Advantech |
| Kinko Optical |
Advantech and Kinko Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantech and Kinko Optical
The main advantage of trading using opposite Advantech and Kinko Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantech position performs unexpectedly, Kinko Optical 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 Kinko Optical will offset losses from the drop in Kinko Optical's long position.| Advantech vs. Taiwan Semiconductor Manufacturing | Advantech vs. Yang Ming Marine | Advantech vs. ASE Industrial Holding | Advantech vs. AU Optronics |
| Kinko Optical vs. Asia Optical Co | Kinko Optical vs. Genius Electronic Optical | Kinko Optical vs. Altek Corp | Kinko Optical vs. Hannstar Display 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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