Correlation Between Kao Fong and Dawushan Farm
Can any of the company-specific risk be diversified away by investing in both Kao Fong and Dawushan Farm 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 Dawushan Farm 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 Dawushan Farm Tech, you can compare the effects of market volatilities on Kao Fong and Dawushan Farm 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 Dawushan Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kao Fong and Dawushan Farm.
Diversification Opportunities for Kao Fong and Dawushan Farm
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kao and Dawushan is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kao Fong Machinery and Dawushan Farm Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawushan Farm Tech 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 Dawushan Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawushan Farm Tech has no effect on the direction of Kao Fong i.e., Kao Fong and Dawushan Farm go up and down completely randomly.
Pair Corralation between Kao Fong and Dawushan Farm
Assuming the 90 days trading horizon Kao Fong Machinery is expected to generate 1.38 times more return on investment than Dawushan Farm. However, Kao Fong is 1.38 times more volatile than Dawushan Farm Tech. It trades about 0.12 of its potential returns per unit of risk. Dawushan Farm Tech is currently generating about -0.01 per unit of risk. If you would invest 1,153 in Kao Fong Machinery on November 28, 2024 and sell it today you would earn a total of 5,037 from holding Kao Fong Machinery or generate 436.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.69% |
| Values | Daily Returns |
Kao Fong Machinery vs. Dawushan Farm Tech
Performance |
| Timeline |
| Kao Fong Machinery |
| Dawushan Farm Tech |
Kao Fong and Dawushan Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kao Fong and Dawushan Farm
The main advantage of trading using opposite Kao Fong and Dawushan Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kao Fong position performs unexpectedly, Dawushan Farm 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 Dawushan Farm will offset losses from the drop in Dawushan Farm'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 |
| Dawushan Farm vs. Cameo Communications | Dawushan Farm vs. Emerging Display Technologies | Dawushan Farm vs. Chung Lien Transportation | Dawushan Farm vs. Dadi Early Childhood Education |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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