Correlation Between King Yuan and Advanced Wireless
Can any of the company-specific risk be diversified away by investing in both King Yuan and Advanced Wireless 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 Advanced Wireless 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 Advanced Wireless Semiconductor, you can compare the effects of market volatilities on King Yuan and Advanced Wireless 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 Advanced Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of King Yuan and Advanced Wireless.
Diversification Opportunities for King Yuan and Advanced Wireless
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between King and Advanced is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding King Yuan Electronics and Advanced Wireless Semiconducto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Wireless 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 Advanced Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Wireless has no effect on the direction of King Yuan i.e., King Yuan and Advanced Wireless go up and down completely randomly.
Pair Corralation between King Yuan and Advanced Wireless
Assuming the 90 days trading horizon King Yuan Electronics is expected to generate 0.73 times more return on investment than Advanced Wireless. However, King Yuan Electronics is 1.37 times less risky than Advanced Wireless. It trades about -0.07 of its potential returns per unit of risk. Advanced Wireless Semiconductor is currently generating about -0.37 per unit of risk. If you would invest 11,650 in King Yuan Electronics on November 5, 2024 and sell it today you would lose (300.00) from holding King Yuan Electronics or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
King Yuan Electronics vs. Advanced Wireless Semiconducto
Performance |
| Timeline |
| King Yuan Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Advanced Wireless |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
King Yuan and Advanced Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with King Yuan and Advanced Wireless
The main advantage of trading using opposite King Yuan and Advanced Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Yuan position performs unexpectedly, Advanced Wireless 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 Advanced Wireless will offset losses from the drop in Advanced Wireless' long position.The idea behind King Yuan Electronics and Advanced Wireless Semiconductor 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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