Correlation Between Kingstate Electronics and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Kingstate Electronics and Hon Hai 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 Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingstate Electronics and Hon Hai Precision, you can compare the effects of market volatilities on Kingstate Electronics and Hon Hai 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 Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingstate Electronics and Hon Hai.
Diversification Opportunities for Kingstate Electronics and Hon Hai
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kingstate and Hon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kingstate Electronics and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision 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 Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Kingstate Electronics i.e., Kingstate Electronics and Hon Hai go up and down completely randomly.
Pair Corralation between Kingstate Electronics and Hon Hai
Assuming the 90 days trading horizon Kingstate Electronics is expected to under-perform the Hon Hai. In addition to that, Kingstate Electronics is 1.13 times more volatile than Hon Hai Precision. It trades about -0.3 of its total potential returns per unit of risk. Hon Hai Precision is currently generating about -0.17 per unit of volatility. If you would invest 21,600 in Hon Hai Precision on August 24, 2024 and sell it today you would lose (1,350) from holding Hon Hai Precision or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingstate Electronics vs. Hon Hai Precision
Performance |
| Timeline |
| Kingstate Electronics |
| Hon Hai Precision |
Kingstate Electronics and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingstate Electronics and Hon Hai
The main advantage of trading using opposite Kingstate Electronics and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingstate Electronics position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai's long position.| Kingstate Electronics vs. Formosan Union Chemical | Kingstate Electronics vs. Acelon Chemicals Fiber | Kingstate Electronics vs. San Fu Chemical | Kingstate Electronics vs. Ambassador Hotel |
| Hon Hai vs. Novatek Microelectronics Corp | Hon Hai vs. MediaTek | Hon Hai vs. Quanta Computer | Hon Hai vs. United Microelectronics |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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