Correlation Between Sunfon Construction and Kinko Optical
Can any of the company-specific risk be diversified away by investing in both Sunfon Construction and Kinko Optical 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 Sunfon Construction and Kinko Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunfon Construction Co and Kinko Optical Co, you can compare the effects of market volatilities on Sunfon Construction and Kinko Optical 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 Sunfon Construction with a short position of Kinko Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfon Construction and Kinko Optical.
Diversification Opportunities for Sunfon Construction and Kinko Optical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunfon and Kinko is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sunfon Construction Co and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical and Sunfon Construction 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 Sunfon Construction Co are associated (or correlated) with Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Sunfon Construction i.e., Sunfon Construction and Kinko Optical go up and down completely randomly.
Pair Corralation between Sunfon Construction and Kinko Optical
Assuming the 90 days trading horizon Sunfon Construction Co is expected to under-perform the Kinko Optical. But the stock apears to be less risky and, when comparing its historical volatility, Sunfon Construction Co is 1.49 times less risky than Kinko Optical. The stock trades about -0.07 of its potential returns per unit of risk. The Kinko Optical Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,540 in Kinko Optical Co on August 29, 2024 and sell it today you would lose (20.00) from holding Kinko Optical Co or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunfon Construction Co vs. Kinko Optical Co
Performance |
| Timeline |
| Sunfon Construction |
| Kinko Optical |
Sunfon Construction and Kinko Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunfon Construction and Kinko Optical
The main advantage of trading using opposite Sunfon Construction and Kinko Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunfon Construction position performs unexpectedly, Kinko Optical 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 Kinko Optical will offset losses from the drop in Kinko Optical's long position.| Sunfon Construction vs. Run Long Construction | Sunfon Construction vs. Chong Hong Construction | Sunfon Construction vs. JSL Construction Development | Sunfon Construction vs. Delpha Construction Co |
| Kinko Optical vs. Asia Optical Co | Kinko Optical vs. Genius Electronic Optical | Kinko Optical vs. Altek Corp | Kinko Optical vs. Hannstar Display Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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