Correlation Between GlobalWafers and Kinsus Interconnect
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Kinsus Interconnect 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 GlobalWafers and Kinsus Interconnect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and Kinsus Interconnect Technology, you can compare the effects of market volatilities on GlobalWafers and Kinsus Interconnect 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 GlobalWafers with a short position of Kinsus Interconnect. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Kinsus Interconnect.
Diversification Opportunities for GlobalWafers and Kinsus Interconnect
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GlobalWafers and Kinsus is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Kinsus Interconnect Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsus Interconnect and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Kinsus Interconnect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsus Interconnect has no effect on the direction of GlobalWafers i.e., GlobalWafers and Kinsus Interconnect go up and down completely randomly.
Pair Corralation between GlobalWafers and Kinsus Interconnect
Assuming the 90 days trading horizon GlobalWafers Co is expected to generate 0.81 times more return on investment than Kinsus Interconnect. However, GlobalWafers Co is 1.24 times less risky than Kinsus Interconnect. It trades about -0.4 of its potential returns per unit of risk. Kinsus Interconnect Technology is currently generating about -0.34 per unit of risk. If you would invest 37,978 in GlobalWafers Co on November 5, 2024 and sell it today you would lose (3,778) from holding GlobalWafers Co or give up 9.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. Kinsus Interconnect Technology
Performance |
| Timeline |
| GlobalWafers |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kinsus Interconnect |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GlobalWafers and Kinsus Interconnect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and Kinsus Interconnect
The main advantage of trading using opposite GlobalWafers and Kinsus Interconnect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Kinsus Interconnect 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 Kinsus Interconnect will offset losses from the drop in Kinsus Interconnect's long position.The idea behind GlobalWafers Co and Kinsus Interconnect Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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