Correlation Between San Fu and Kingstate Electronics
Can any of the company-specific risk be diversified away by investing in both San Fu and Kingstate Electronics 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 San Fu and Kingstate Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Fu Chemical and Kingstate Electronics, you can compare the effects of market volatilities on San Fu and Kingstate Electronics 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 San Fu with a short position of Kingstate Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Fu and Kingstate Electronics.
Diversification Opportunities for San Fu and Kingstate Electronics
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between San and Kingstate is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding San Fu Chemical and Kingstate Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstate Electronics and San Fu 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 San Fu Chemical are associated (or correlated) with Kingstate Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstate Electronics has no effect on the direction of San Fu i.e., San Fu and Kingstate Electronics go up and down completely randomly.
Pair Corralation between San Fu and Kingstate Electronics
Assuming the 90 days trading horizon San Fu Chemical is expected to generate 0.63 times more return on investment than Kingstate Electronics. However, San Fu Chemical is 1.58 times less risky than Kingstate Electronics. It trades about -0.16 of its potential returns per unit of risk. Kingstate Electronics is currently generating about -0.22 per unit of risk. If you would invest 12,900 in San Fu Chemical on August 28, 2024 and sell it today you would lose (550.00) from holding San Fu Chemical or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Fu Chemical vs. Kingstate Electronics
Performance |
| Timeline |
| San Fu Chemical |
| Kingstate Electronics |
San Fu and Kingstate Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Fu and Kingstate Electronics
The main advantage of trading using opposite San Fu and Kingstate Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu position performs unexpectedly, Kingstate Electronics 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 Kingstate Electronics will offset losses from the drop in Kingstate Electronics' long position.| San Fu vs. Delta Electronics | San Fu vs. China Steel Chemical | San Fu vs. Hota Industrial Mfg | San Fu vs. Ruentex Development Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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