Correlation Between New Asia and Koge Micro
Can any of the company-specific risk be diversified away by investing in both New Asia and Koge Micro 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 New Asia and Koge Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Asia Construction and Koge Micro Tech, you can compare the effects of market volatilities on New Asia and Koge Micro 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 New Asia with a short position of Koge Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Koge Micro.
Diversification Opportunities for New Asia and Koge Micro
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and Koge is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction and Koge Micro Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koge Micro Tech and New Asia 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 New Asia Construction are associated (or correlated) with Koge Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koge Micro Tech has no effect on the direction of New Asia i.e., New Asia and Koge Micro go up and down completely randomly.
Pair Corralation between New Asia and Koge Micro
Assuming the 90 days trading horizon New Asia Construction is expected to generate 1.55 times more return on investment than Koge Micro. However, New Asia is 1.55 times more volatile than Koge Micro Tech. It trades about 0.01 of its potential returns per unit of risk. Koge Micro Tech is currently generating about -0.01 per unit of risk. If you would invest 1,365 in New Asia Construction on September 12, 2024 and sell it today you would lose (40.00) from holding New Asia Construction or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Asia Construction vs. Koge Micro Tech
Performance |
| Timeline |
| New Asia Construction |
| Koge Micro Tech |
New Asia and Koge Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and Koge Micro
The main advantage of trading using opposite New Asia and Koge Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia position performs unexpectedly, Koge Micro 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 Koge Micro will offset losses from the drop in Koge Micro's long position.| New Asia vs. Yang Ming Marine | New Asia vs. Wan Hai Lines | New Asia vs. U Ming Marine Transport | New Asia vs. Taiwan Navigation Co |
| Koge Micro vs. New Asia Construction | Koge Micro vs. Huang Hsiang Construction | Koge Micro vs. X Legend Entertainment Co | Koge Micro vs. ReaLy Development Construction |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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