Correlation Between Chien Kuo and Kao Fong
Can any of the company-specific risk be diversified away by investing in both Chien Kuo and Kao Fong 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 Chien Kuo and Kao Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chien Kuo Construction and Kao Fong Machinery, you can compare the effects of market volatilities on Chien Kuo and Kao Fong 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 Chien Kuo with a short position of Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chien Kuo and Kao Fong.
Diversification Opportunities for Chien Kuo and Kao Fong
Very good diversification
The 3 months correlation between Chien and Kao is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chien Kuo Construction and Kao Fong Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kao Fong Machinery and Chien Kuo 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 Chien Kuo Construction are associated (or correlated) with Kao Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kao Fong Machinery has no effect on the direction of Chien Kuo i.e., Chien Kuo and Kao Fong go up and down completely randomly.
Pair Corralation between Chien Kuo and Kao Fong
Assuming the 90 days trading horizon Chien Kuo Construction is expected to generate 0.76 times more return on investment than Kao Fong. However, Chien Kuo Construction is 1.32 times less risky than Kao Fong. It trades about 0.14 of its potential returns per unit of risk. Kao Fong Machinery is currently generating about 0.09 per unit of risk. If you would invest 2,260 in Chien Kuo Construction on August 30, 2024 and sell it today you would earn a total of 440.00 from holding Chien Kuo Construction or generate 19.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chien Kuo Construction vs. Kao Fong Machinery
Performance |
| Timeline |
| Chien Kuo Construction |
| Kao Fong Machinery |
Chien Kuo and Kao Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chien Kuo and Kao Fong
The main advantage of trading using opposite Chien Kuo and Kao Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chien Kuo position performs unexpectedly, Kao Fong 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 Kao Fong will offset losses from the drop in Kao Fong's long position.| Chien Kuo vs. Yulon Motor Co | Chien Kuo vs. Far Eastern Department | Chien Kuo vs. China Steel Corp | Chien Kuo vs. Chang Hwa Commercial |
| Kao Fong vs. Yeou Yih Steel | Kao Fong vs. Data International Co | Kao Fong vs. K Way Information | Kao Fong vs. Quanta Storage |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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