Correlation Between Chien Kuo and Actron Technology
Can any of the company-specific risk be diversified away by investing in both Chien Kuo and Actron Technology 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 Actron Technology 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 Actron Technology, you can compare the effects of market volatilities on Chien Kuo and Actron Technology 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 Actron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chien Kuo and Actron Technology.
Diversification Opportunities for Chien Kuo and Actron Technology
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chien and Actron is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chien Kuo Construction and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron Technology 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 Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of Chien Kuo i.e., Chien Kuo and Actron Technology go up and down completely randomly.
Pair Corralation between Chien Kuo and Actron Technology
Assuming the 90 days trading horizon Chien Kuo Construction is expected to generate 1.07 times more return on investment than Actron Technology. However, Chien Kuo is 1.07 times more volatile than Actron Technology. It trades about 0.09 of its potential returns per unit of risk. Actron Technology is currently generating about 0.01 per unit of risk. If you would invest 1,140 in Chien Kuo Construction on September 2, 2024 and sell it today you would earn a total of 1,585 from holding Chien Kuo Construction or generate 139.04% 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. Actron Technology
Performance |
| Timeline |
| Chien Kuo Construction |
| Actron Technology |
Chien Kuo and Actron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chien Kuo and Actron Technology
The main advantage of trading using opposite Chien Kuo and Actron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chien Kuo position performs unexpectedly, Actron Technology 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 Actron Technology will offset losses from the drop in Actron Technology's long position.| Chien Kuo vs. BES Engineering Co | Chien Kuo vs. Continental Holdings Corp | Chien Kuo vs. Kee Tai Properties | Chien Kuo vs. Hung Sheng Construction |
| Actron Technology vs. Hota Industrial Mfg | Actron Technology vs. BizLink Holding | Actron Technology vs. Cub Elecparts | Actron Technology vs. Hu Lane Associate |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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