Correlation Between Kao Fong and Onyx Healthcare
Can any of the company-specific risk be diversified away by investing in both Kao Fong and Onyx Healthcare 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 Onyx Healthcare 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 Onyx Healthcare, you can compare the effects of market volatilities on Kao Fong and Onyx Healthcare 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 Onyx Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kao Fong and Onyx Healthcare.
Diversification Opportunities for Kao Fong and Onyx Healthcare
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kao and Onyx is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kao Fong Machinery and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare 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 Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of Kao Fong i.e., Kao Fong and Onyx Healthcare go up and down completely randomly.
Pair Corralation between Kao Fong and Onyx Healthcare
Assuming the 90 days trading horizon Kao Fong is expected to generate 5.54 times less return on investment than Onyx Healthcare. But when comparing it to its historical volatility, Kao Fong Machinery is 12.84 times less risky than Onyx Healthcare. It trades about 0.1 of its potential returns per unit of risk. Onyx Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,151 in Onyx Healthcare on October 11, 2024 and sell it today you would earn a total of 7,549 from holding Onyx Healthcare or generate 92.61% 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. Onyx Healthcare
Performance |
| Timeline |
| Kao Fong Machinery |
| Onyx Healthcare |
Kao Fong and Onyx Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kao Fong and Onyx Healthcare
The main advantage of trading using opposite Kao Fong and Onyx Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kao Fong position performs unexpectedly, Onyx Healthcare 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 Onyx Healthcare will offset losses from the drop in Onyx Healthcare's long position.| Kao Fong vs. Tong Hwa Synthetic Fiber | Kao Fong vs. Galaxy Software Services | Kao Fong vs. Sino American Silicon Products | Kao Fong vs. Loop Telecommunication International |
| Onyx Healthcare vs. Chung Lien Transportation | Onyx Healthcare vs. Shin Kong Financial | Onyx Healthcare vs. Sinopac Financial Holdings | Onyx Healthcare vs. IBF Financial Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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