Correlation Between Kao Fong and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Kao Fong and Hung Sheng 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 Kao Fong and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kao Fong Machinery and Hung Sheng Construction, you can compare the effects of market volatilities on Kao Fong and Hung Sheng 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 Kao Fong with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kao Fong and Hung Sheng.
Diversification Opportunities for Kao Fong and Hung Sheng
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kao and Hung is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kao Fong Machinery and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction and Kao Fong 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 Kao Fong Machinery are associated (or correlated) with Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Kao Fong i.e., Kao Fong and Hung Sheng go up and down completely randomly.
Pair Corralation between Kao Fong and Hung Sheng
Assuming the 90 days trading horizon Kao Fong Machinery is expected to generate 3.1 times more return on investment than Hung Sheng. However, Kao Fong is 3.1 times more volatile than Hung Sheng Construction. It trades about 0.15 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.08 per unit of risk. If you would invest 4,170 in Kao Fong Machinery on September 2, 2024 and sell it today you would earn a total of 615.00 from holding Kao Fong Machinery or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kao Fong Machinery vs. Hung Sheng Construction
Performance |
| Timeline |
| Kao Fong Machinery |
| Hung Sheng Construction |
Kao Fong and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kao Fong and Hung Sheng
The main advantage of trading using opposite Kao Fong and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kao Fong position performs unexpectedly, Hung Sheng 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 Hung Sheng will offset losses from the drop in Hung Sheng's long position.| Kao Fong vs. Tung Thih Electronic | Kao Fong vs. Golden Biotechnology | Kao Fong vs. GeneFerm Biotechnology Co | Kao Fong vs. Microelectronics Technology |
| Hung Sheng vs. Chainqui Construction Development | Hung Sheng vs. Kee Tai Properties | Hung Sheng vs. BES Engineering Co | Hung Sheng vs. Zinwell |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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