Correlation Between King Yuan and Vanguard International
Can any of the company-specific risk be diversified away by investing in both King Yuan and Vanguard International 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 King Yuan and Vanguard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between King Yuan Electronics and Vanguard International Semiconductor, you can compare the effects of market volatilities on King Yuan and Vanguard International 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 King Yuan with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of King Yuan and Vanguard International.
Diversification Opportunities for King Yuan and Vanguard International
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between King and Vanguard is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding King Yuan Electronics and Vanguard International Semicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and King Yuan 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 King Yuan Electronics are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of King Yuan i.e., King Yuan and Vanguard International go up and down completely randomly.
Pair Corralation between King Yuan and Vanguard International
Assuming the 90 days trading horizon King Yuan is expected to generate 1.33 times less return on investment than Vanguard International. But when comparing it to its historical volatility, King Yuan Electronics is 1.12 times less risky than Vanguard International. It trades about 0.3 of its potential returns per unit of risk. Vanguard International Semiconductor is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 8,810 in Vanguard International Semiconductor on November 27, 2024 and sell it today you would earn a total of 1,340 from holding Vanguard International Semiconductor or generate 15.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
King Yuan Electronics vs. Vanguard International Semicon
Performance |
| Timeline |
| King Yuan Electronics |
| Vanguard International |
King Yuan and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with King Yuan and Vanguard International
The main advantage of trading using opposite King Yuan and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Yuan position performs unexpectedly, Vanguard International 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 Vanguard International will offset losses from the drop in Vanguard International's long position.| King Yuan vs. Powertech Technology | King Yuan vs. Novatek Microelectronics Corp | King Yuan vs. Greatek Electronics | King Yuan vs. Nanya Technology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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