Correlation Between Solid State and Kung Long
Can any of the company-specific risk be diversified away by investing in both Solid State and Kung Long 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 Solid State and Kung Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solid State System and Kung Long Batteries, you can compare the effects of market volatilities on Solid State and Kung Long 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 Solid State with a short position of Kung Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid State and Kung Long.
Diversification Opportunities for Solid State and Kung Long
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solid and Kung is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Solid State System and Kung Long Batteries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kung Long Batteries and Solid State 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 Solid State System are associated (or correlated) with Kung Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kung Long Batteries has no effect on the direction of Solid State i.e., Solid State and Kung Long go up and down completely randomly.
Pair Corralation between Solid State and Kung Long
Assuming the 90 days trading horizon Solid State System is expected to under-perform the Kung Long. In addition to that, Solid State is 1.01 times more volatile than Kung Long Batteries. It trades about -0.18 of its total potential returns per unit of risk. Kung Long Batteries is currently generating about 0.21 per unit of volatility. If you would invest 14,850 in Kung Long Batteries on August 30, 2024 and sell it today you would earn a total of 1,200 from holding Kung Long Batteries or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solid State System vs. Kung Long Batteries
Performance |
| Timeline |
| Solid State System |
| Kung Long Batteries |
Solid State and Kung Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solid State and Kung Long
The main advantage of trading using opposite Solid State and Kung Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid State position performs unexpectedly, Kung Long 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 Kung Long will offset losses from the drop in Kung Long's long position.| Solid State vs. Taiwan Semiconductor Manufacturing | Solid State vs. MediaTek | Solid State vs. United Microelectronics | Solid State vs. Novatek Microelectronics Corp |
| Kung Long vs. Grape King Bio | Kung Long vs. TTET Union Corp | Kung Long vs. Zeng Hsing Industrial | Kung Long vs. Basso Industry Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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