Correlation Between Information Technology and Kinko Optical
Can any of the company-specific risk be diversified away by investing in both Information Technology and Kinko Optical 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 Information Technology and Kinko Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Technology Total and Kinko Optical Co, you can compare the effects of market volatilities on Information Technology and Kinko Optical 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 Information Technology with a short position of Kinko Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Technology and Kinko Optical.
Diversification Opportunities for Information Technology and Kinko Optical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Information and Kinko is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Information Technology Total and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical and Information Technology 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 Information Technology Total are associated (or correlated) with Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Information Technology i.e., Information Technology and Kinko Optical go up and down completely randomly.
Pair Corralation between Information Technology and Kinko Optical
Assuming the 90 days trading horizon Information Technology is expected to generate 2.14 times less return on investment than Kinko Optical. But when comparing it to its historical volatility, Information Technology Total is 1.01 times less risky than Kinko Optical. It trades about 0.19 of its potential returns per unit of risk. Kinko Optical Co is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 2,665 in Kinko Optical Co on November 27, 2024 and sell it today you would earn a total of 600.00 from holding Kinko Optical Co or generate 22.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Technology Total vs. Kinko Optical Co
Performance |
| Timeline |
| Information Technology |
| Kinko Optical |
Information Technology and Kinko Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Technology and Kinko Optical
The main advantage of trading using opposite Information Technology and Kinko Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Technology position performs unexpectedly, Kinko Optical 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 Kinko Optical will offset losses from the drop in Kinko Optical's long position.| Information Technology vs. Phytohealth Corp | Information Technology vs. Tigerair Taiwan Co | Information Technology vs. Lian Hwa Foods | Information Technology vs. Pacific Hospital Supply |
| Kinko Optical vs. Asia Optical Co | Kinko Optical vs. Genius Electronic Optical | Kinko Optical vs. Altek Corp | Kinko Optical vs. Hannstar Display Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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