Correlation Between Kingstate Electronics and Arbor Technology
Can any of the company-specific risk be diversified away by investing in both Kingstate Electronics and Arbor Technology 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 Arbor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingstate Electronics and Arbor Technology, you can compare the effects of market volatilities on Kingstate Electronics and Arbor Technology 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 Arbor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingstate Electronics and Arbor Technology.
Diversification Opportunities for Kingstate Electronics and Arbor Technology
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kingstate and Arbor is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kingstate Electronics and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Technology 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 Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of Kingstate Electronics i.e., Kingstate Electronics and Arbor Technology go up and down completely randomly.
Pair Corralation between Kingstate Electronics and Arbor Technology
Assuming the 90 days trading horizon Kingstate Electronics is expected to generate 0.47 times more return on investment than Arbor Technology. However, Kingstate Electronics is 2.12 times less risky than Arbor Technology. It trades about 0.03 of its potential returns per unit of risk. Arbor Technology is currently generating about -0.37 per unit of risk. If you would invest 4,260 in Kingstate Electronics on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Kingstate Electronics or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingstate Electronics vs. Arbor Technology
Performance |
| Timeline |
| Kingstate Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Arbor Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Kingstate Electronics and Arbor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingstate Electronics and Arbor Technology
The main advantage of trading using opposite Kingstate Electronics and Arbor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingstate Electronics position performs unexpectedly, Arbor Technology 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 Arbor Technology will offset losses from the drop in Arbor Technology's long position.The idea behind Kingstate Electronics and Arbor Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |