Correlation Between Kingstate Electronics and Goodway Machine
Can any of the company-specific risk be diversified away by investing in both Kingstate Electronics and Goodway Machine 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 Kingstate Electronics and Goodway Machine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingstate Electronics and Goodway Machine Corp, you can compare the effects of market volatilities on Kingstate Electronics and Goodway Machine 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 Kingstate Electronics with a short position of Goodway Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingstate Electronics and Goodway Machine.
Diversification Opportunities for Kingstate Electronics and Goodway Machine
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kingstate and Goodway is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kingstate Electronics and Goodway Machine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodway Machine Corp and Kingstate Electronics 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 Kingstate Electronics are associated (or correlated) with Goodway Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodway Machine Corp has no effect on the direction of Kingstate Electronics i.e., Kingstate Electronics and Goodway Machine go up and down completely randomly.
Pair Corralation between Kingstate Electronics and Goodway Machine
Assuming the 90 days trading horizon Kingstate Electronics is expected to generate 1.64 times more return on investment than Goodway Machine. However, Kingstate Electronics is 1.64 times more volatile than Goodway Machine Corp. It trades about 0.05 of its potential returns per unit of risk. Goodway Machine Corp is currently generating about 0.01 per unit of risk. If you would invest 2,965 in Kingstate Electronics on September 2, 2024 and sell it today you would earn a total of 1,315 from holding Kingstate Electronics or generate 44.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Kingstate Electronics vs. Goodway Machine Corp
Performance |
| Timeline |
| Kingstate Electronics |
| Goodway Machine Corp |
Kingstate Electronics and Goodway Machine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingstate Electronics and Goodway Machine
The main advantage of trading using opposite Kingstate Electronics and Goodway Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingstate Electronics position performs unexpectedly, Goodway Machine 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 Goodway Machine will offset losses from the drop in Goodway Machine's long position.| Kingstate Electronics vs. Hon Hai Precision | Kingstate Electronics vs. Delta Electronics | Kingstate Electronics vs. LARGAN Precision Co | Kingstate Electronics vs. Yageo Corp |
| Goodway Machine vs. Easywell Biomedicals | Goodway Machine vs. Louisa Professional Coffee | Goodway Machine vs. Great China Metal | Goodway Machine vs. Chailease Holding Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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