Correlation Between K Way and ZongTai Real
Can any of the company-specific risk be diversified away by investing in both K Way and ZongTai Real 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 K Way and ZongTai Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K Way Information and ZongTai Real Estate, you can compare the effects of market volatilities on K Way and ZongTai Real 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 K Way with a short position of ZongTai Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of K Way and ZongTai Real.
Diversification Opportunities for K Way and ZongTai Real
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 5201 and ZongTai is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding K Way Information and ZongTai Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZongTai Real Estate and K Way 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 K Way Information are associated (or correlated) with ZongTai Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZongTai Real Estate has no effect on the direction of K Way i.e., K Way and ZongTai Real go up and down completely randomly.
Pair Corralation between K Way and ZongTai Real
Assuming the 90 days trading horizon K Way Information is expected to under-perform the ZongTai Real. But the stock apears to be less risky and, when comparing its historical volatility, K Way Information is 1.33 times less risky than ZongTai Real. The stock trades about -0.13 of its potential returns per unit of risk. The ZongTai Real Estate is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,150 in ZongTai Real Estate on August 27, 2024 and sell it today you would earn a total of 285.00 from holding ZongTai Real Estate or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K Way Information vs. ZongTai Real Estate
Performance |
| Timeline |
| K Way Information |
| ZongTai Real Estate |
K Way and ZongTai Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K Way and ZongTai Real
The main advantage of trading using opposite K Way and ZongTai Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K Way position performs unexpectedly, ZongTai Real 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 ZongTai Real will offset losses from the drop in ZongTai Real's long position.| K Way vs. EnTie Commercial Bank | K Way vs. Taichung Commercial Bank | K Way vs. China Development Financial | K Way vs. Union Bank of |
| ZongTai Real vs. Universal Microelectronics Co | ZongTai Real vs. Pacific Hospital Supply | ZongTai Real vs. ABC Taiwan Electronics | ZongTai Real vs. Onyx Healthcare |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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