Correlation Between Leatec Fine and Kwong Fong
Can any of the company-specific risk be diversified away by investing in both Leatec Fine and Kwong 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 Leatec Fine and Kwong Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leatec Fine Ceramics and Kwong Fong Industries, you can compare the effects of market volatilities on Leatec Fine and Kwong 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 Leatec Fine with a short position of Kwong Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leatec Fine and Kwong Fong.
Diversification Opportunities for Leatec Fine and Kwong Fong
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leatec and Kwong is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Leatec Fine Ceramics and Kwong Fong Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwong Fong Industries and Leatec Fine 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 Leatec Fine Ceramics are associated (or correlated) with Kwong Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwong Fong Industries has no effect on the direction of Leatec Fine i.e., Leatec Fine and Kwong Fong go up and down completely randomly.
Pair Corralation between Leatec Fine and Kwong Fong
Assuming the 90 days trading horizon Leatec Fine Ceramics is expected to generate 1.63 times more return on investment than Kwong Fong. However, Leatec Fine is 1.63 times more volatile than Kwong Fong Industries. It trades about -0.05 of its potential returns per unit of risk. Kwong Fong Industries is currently generating about -0.13 per unit of risk. If you would invest 2,975 in Leatec Fine Ceramics on August 27, 2024 and sell it today you would lose (85.00) from holding Leatec Fine Ceramics or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leatec Fine Ceramics vs. Kwong Fong Industries
Performance |
| Timeline |
| Leatec Fine Ceramics |
| Kwong Fong Industries |
Leatec Fine and Kwong Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leatec Fine and Kwong Fong
The main advantage of trading using opposite Leatec Fine and Kwong Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leatec Fine position performs unexpectedly, Kwong 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 Kwong Fong will offset losses from the drop in Kwong Fong's long position.| Leatec Fine vs. Chiu Ting Machinery | Leatec Fine vs. Great Computer | Leatec Fine vs. Ruentex Engineering Construction | Leatec Fine vs. Sesoda Corp |
| Kwong Fong vs. Taiwan Semiconductor Manufacturing | Kwong Fong vs. Hon Hai Precision | Kwong Fong vs. MediaTek | Kwong Fong vs. Chunghwa Telecom 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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