Correlation Between Voltronic Power and Chien Kuo
Can any of the company-specific risk be diversified away by investing in both Voltronic Power and Chien Kuo 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 Voltronic Power and Chien Kuo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voltronic Power Technology and Chien Kuo Construction, you can compare the effects of market volatilities on Voltronic Power and Chien Kuo 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 Voltronic Power with a short position of Chien Kuo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voltronic Power and Chien Kuo.
Diversification Opportunities for Voltronic Power and Chien Kuo
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Voltronic and Chien is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Voltronic Power Technology and Chien Kuo Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Kuo Construction and Voltronic Power 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 Voltronic Power Technology are associated (or correlated) with Chien Kuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Kuo Construction has no effect on the direction of Voltronic Power i.e., Voltronic Power and Chien Kuo go up and down completely randomly.
Pair Corralation between Voltronic Power and Chien Kuo
Assuming the 90 days trading horizon Voltronic Power Technology is expected to under-perform the Chien Kuo. But the stock apears to be less risky and, when comparing its historical volatility, Voltronic Power Technology is 1.17 times less risky than Chien Kuo. The stock trades about -0.21 of its potential returns per unit of risk. The Chien Kuo Construction is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,543 in Chien Kuo Construction on August 30, 2024 and sell it today you would earn a total of 157.00 from holding Chien Kuo Construction or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voltronic Power Technology vs. Chien Kuo Construction
Performance |
| Timeline |
| Voltronic Power Tech |
| Chien Kuo Construction |
Voltronic Power and Chien Kuo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voltronic Power and Chien Kuo
The main advantage of trading using opposite Voltronic Power and Chien Kuo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voltronic Power position performs unexpectedly, Chien Kuo 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 Chien Kuo will offset losses from the drop in Chien Kuo's long position.| Voltronic Power vs. Simplo Technology Co | Voltronic Power vs. Amtran Technology Co | Voltronic Power vs. Allis Electric Co |
| Chien Kuo vs. Yulon Motor Co | Chien Kuo vs. Far Eastern Department | Chien Kuo vs. China Steel Corp | Chien Kuo vs. Chang Hwa Commercial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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