Correlation Between Kao Fong and Cayenne Entertainment
Can any of the company-specific risk be diversified away by investing in both Kao Fong and Cayenne Entertainment 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 Cayenne Entertainment 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 Cayenne Entertainment Technology, you can compare the effects of market volatilities on Kao Fong and Cayenne Entertainment 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 Cayenne Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kao Fong and Cayenne Entertainment.
Diversification Opportunities for Kao Fong and Cayenne Entertainment
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kao and Cayenne is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kao Fong Machinery and Cayenne Entertainment Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayenne Entertainment 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 Cayenne Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayenne Entertainment has no effect on the direction of Kao Fong i.e., Kao Fong and Cayenne Entertainment go up and down completely randomly.
Pair Corralation between Kao Fong and Cayenne Entertainment
Assuming the 90 days trading horizon Kao Fong is expected to generate 1.67 times less return on investment than Cayenne Entertainment. But when comparing it to its historical volatility, Kao Fong Machinery is 1.34 times less risky than Cayenne Entertainment. It trades about 0.6 of its potential returns per unit of risk. Cayenne Entertainment Technology is currently generating about 0.76 of returns per unit of risk over similar time horizon. If you would invest 3,870 in Cayenne Entertainment Technology on November 28, 2024 and sell it today you would earn a total of 4,030 from holding Cayenne Entertainment Technology or generate 104.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kao Fong Machinery vs. Cayenne Entertainment Technolo
Performance |
| Timeline |
| Kao Fong Machinery |
| Cayenne Entertainment |
Kao Fong and Cayenne Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kao Fong and Cayenne Entertainment
The main advantage of trading using opposite Kao Fong and Cayenne Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kao Fong position performs unexpectedly, Cayenne Entertainment 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 Cayenne Entertainment will offset losses from the drop in Cayenne Entertainment'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. King Slide Works |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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