Correlation Between Insyde Software and Kao Fong
Can any of the company-specific risk be diversified away by investing in both Insyde Software 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 Insyde Software and Kao Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insyde Software and Kao Fong Machinery, you can compare the effects of market volatilities on Insyde Software 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 Insyde Software with a short position of Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insyde Software and Kao Fong.
Diversification Opportunities for Insyde Software and Kao Fong
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insyde and Kao is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Insyde Software 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 Insyde Software 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 Insyde Software 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 Insyde Software i.e., Insyde Software and Kao Fong go up and down completely randomly.
Pair Corralation between Insyde Software and Kao Fong
Assuming the 90 days trading horizon Insyde Software is expected to generate 1.36 times more return on investment than Kao Fong. However, Insyde Software is 1.36 times more volatile than Kao Fong Machinery. It trades about 0.08 of its potential returns per unit of risk. Kao Fong Machinery is currently generating about -0.24 per unit of risk. If you would invest 38,250 in Insyde Software on October 30, 2024 and sell it today you would earn a total of 1,850 from holding Insyde Software or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insyde Software vs. Kao Fong Machinery
Performance |
| Timeline |
| Insyde Software |
| Kao Fong Machinery |
Insyde Software and Kao Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insyde Software and Kao Fong
The main advantage of trading using opposite Insyde Software and Kao Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insyde Software 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.| Insyde Software vs. Brogent Technologies | Insyde Software vs. GCS Holdings | Insyde Software vs. Otsuka Information Technology | Insyde Software vs. Penpower Technology |
| Kao Fong vs. Cameo Communications | Kao Fong vs. Chief Telecom | Kao Fong vs. Provision Information CoLtd | Kao Fong vs. Information Technology Total |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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