Correlation Between Prosperity Dielectrics and Kaimei Electronic
Can any of the company-specific risk be diversified away by investing in both Prosperity Dielectrics and Kaimei Electronic 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 Prosperity Dielectrics and Kaimei Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Dielectrics Co and Kaimei Electronic Corp, you can compare the effects of market volatilities on Prosperity Dielectrics and Kaimei Electronic 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 Prosperity Dielectrics with a short position of Kaimei Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Dielectrics and Kaimei Electronic.
Diversification Opportunities for Prosperity Dielectrics and Kaimei Electronic
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prosperity and Kaimei is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Dielectrics Co and Kaimei Electronic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaimei Electronic Corp and Prosperity Dielectrics 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 Prosperity Dielectrics Co are associated (or correlated) with Kaimei Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaimei Electronic Corp has no effect on the direction of Prosperity Dielectrics i.e., Prosperity Dielectrics and Kaimei Electronic go up and down completely randomly.
Pair Corralation between Prosperity Dielectrics and Kaimei Electronic
Assuming the 90 days trading horizon Prosperity Dielectrics Co is expected to under-perform the Kaimei Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Prosperity Dielectrics Co is 1.31 times less risky than Kaimei Electronic. The stock trades about -0.04 of its potential returns per unit of risk. The Kaimei Electronic Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 6,960 in Kaimei Electronic Corp on November 28, 2024 and sell it today you would lose (150.00) from holding Kaimei Electronic Corp or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.32% |
| Values | Daily Returns |
Prosperity Dielectrics Co vs. Kaimei Electronic Corp
Performance |
| Timeline |
| Prosperity Dielectrics |
| Kaimei Electronic Corp |
Prosperity Dielectrics and Kaimei Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Dielectrics and Kaimei Electronic
The main advantage of trading using opposite Prosperity Dielectrics and Kaimei Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Dielectrics position performs unexpectedly, Kaimei Electronic 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 Kaimei Electronic will offset losses from the drop in Kaimei Electronic's long position.| Prosperity Dielectrics vs. Walsin Technology Corp | Prosperity Dielectrics vs. Yageo Corp | Prosperity Dielectrics vs. Wafer Works | Prosperity Dielectrics vs. Chipbond Technology |
| Kaimei Electronic vs. Yageo Corp | Kaimei Electronic vs. Taiwan Mask Corp | Kaimei Electronic vs. Macronix International Co | Kaimei Electronic vs. Gold Circuit Electronics |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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