Correlation Between Kao Fong and Skardin Industrial
Can any of the company-specific risk be diversified away by investing in both Kao Fong and Skardin Industrial 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 Skardin Industrial 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 Skardin Industrial, you can compare the effects of market volatilities on Kao Fong and Skardin Industrial 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 Skardin Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kao Fong and Skardin Industrial.
Diversification Opportunities for Kao Fong and Skardin Industrial
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kao and Skardin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kao Fong Machinery and Skardin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skardin Industrial 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 Skardin Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skardin Industrial has no effect on the direction of Kao Fong i.e., Kao Fong and Skardin Industrial go up and down completely randomly.
Pair Corralation between Kao Fong and Skardin Industrial
Assuming the 90 days trading horizon Kao Fong Machinery is expected to generate 1.14 times more return on investment than Skardin Industrial. However, Kao Fong is 1.14 times more volatile than Skardin Industrial. It trades about 0.07 of its potential returns per unit of risk. Skardin Industrial is currently generating about 0.05 per unit of risk. If you would invest 4,295 in Kao Fong Machinery on September 5, 2024 and sell it today you would earn a total of 410.00 from holding Kao Fong Machinery or generate 9.55% 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. Skardin Industrial
Performance |
| Timeline |
| Kao Fong Machinery |
| Skardin Industrial |
Kao Fong and Skardin Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kao Fong and Skardin Industrial
The main advantage of trading using opposite Kao Fong and Skardin Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kao Fong position performs unexpectedly, Skardin Industrial 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 Skardin Industrial will offset losses from the drop in Skardin Industrial's long position.| Kao Fong vs. Airtac International Group | Kao Fong vs. TECO Electric Machinery | Kao Fong vs. Chung Hsin Electric Machinery | Kao Fong vs. Ruentex Development Co |
| Skardin Industrial vs. Ruentex Engineering Construction | Skardin Industrial vs. Kao Fong Machinery | Skardin Industrial vs. Sporton International | Skardin Industrial vs. Kindom Construction 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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