Correlation Between Yem Chio and Kung Sing
Can any of the company-specific risk be diversified away by investing in both Yem Chio and Kung Sing 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 Yem Chio and Kung Sing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yem Chio Co and Kung Sing Engineering, you can compare the effects of market volatilities on Yem Chio and Kung Sing 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 Yem Chio with a short position of Kung Sing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yem Chio and Kung Sing.
Diversification Opportunities for Yem Chio and Kung Sing
Very poor diversification
The 3 months correlation between Yem and Kung is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Yem Chio Co and Kung Sing Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kung Sing Engineering and Yem Chio 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 Yem Chio Co are associated (or correlated) with Kung Sing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kung Sing Engineering has no effect on the direction of Yem Chio i.e., Yem Chio and Kung Sing go up and down completely randomly.
Pair Corralation between Yem Chio and Kung Sing
Assuming the 90 days trading horizon Yem Chio Co is expected to under-perform the Kung Sing. But the stock apears to be less risky and, when comparing its historical volatility, Yem Chio Co is 1.23 times less risky than Kung Sing. The stock trades about -0.03 of its potential returns per unit of risk. The Kung Sing Engineering is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,325 in Kung Sing Engineering on November 28, 2024 and sell it today you would lose (135.00) from holding Kung Sing Engineering or give up 10.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yem Chio Co vs. Kung Sing Engineering
Performance |
| Timeline |
| Yem Chio |
| Kung Sing Engineering |
Yem Chio and Kung Sing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yem Chio and Kung Sing
The main advantage of trading using opposite Yem Chio and Kung Sing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yem Chio position performs unexpectedly, Kung Sing 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 Sing will offset losses from the drop in Kung Sing's long position.| Yem Chio vs. USI Corp | Yem Chio vs. Asia Polymer Corp | Yem Chio vs. Sincere Navigation Corp | Yem Chio vs. Lealea Enterprise Co |
| Kung Sing vs. Chien Kuo Construction | Kung Sing vs. Kee Tai Properties | Kung Sing vs. Grand Pacific Petrochemical | Kung Sing vs. BES Engineering 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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