Correlation Between Sports Gear and Kingstate Electronics
Can any of the company-specific risk be diversified away by investing in both Sports Gear and Kingstate Electronics 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 Sports Gear and Kingstate Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sports Gear Co and Kingstate Electronics, you can compare the effects of market volatilities on Sports Gear and Kingstate Electronics 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 Sports Gear with a short position of Kingstate Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Gear and Kingstate Electronics.
Diversification Opportunities for Sports Gear and Kingstate Electronics
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sports and Kingstate is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sports Gear Co and Kingstate Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstate Electronics and Sports Gear 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 Sports Gear Co are associated (or correlated) with Kingstate Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstate Electronics has no effect on the direction of Sports Gear i.e., Sports Gear and Kingstate Electronics go up and down completely randomly.
Pair Corralation between Sports Gear and Kingstate Electronics
Assuming the 90 days trading horizon Sports Gear Co is expected to generate 2.12 times more return on investment than Kingstate Electronics. However, Sports Gear is 2.12 times more volatile than Kingstate Electronics. It trades about 0.32 of its potential returns per unit of risk. Kingstate Electronics is currently generating about -0.23 per unit of risk. If you would invest 11,350 in Sports Gear Co on August 27, 2024 and sell it today you would earn a total of 3,400 from holding Sports Gear Co or generate 29.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sports Gear Co vs. Kingstate Electronics
Performance |
| Timeline |
| Sports Gear |
| Kingstate Electronics |
Sports Gear and Kingstate Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sports Gear and Kingstate Electronics
The main advantage of trading using opposite Sports Gear and Kingstate Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Gear position performs unexpectedly, Kingstate Electronics 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 Kingstate Electronics will offset losses from the drop in Kingstate Electronics' long position.| Sports Gear vs. Pou Chen Corp | Sports Gear vs. Fulgent Sun International | Sports Gear vs. Advanced Energy Solution |
| Kingstate Electronics vs. Taiwan Speciality Chemicals | Kingstate Electronics vs. Sports Gear Co | Kingstate Electronics vs. Oceanic Beverages Co | Kingstate Electronics vs. Sporton International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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