Correlation Between Dawushan Farm and Kao Fong
Can any of the company-specific risk be diversified away by investing in both Dawushan Farm 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 Dawushan Farm and Kao Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dawushan Farm Tech and Kao Fong Machinery, you can compare the effects of market volatilities on Dawushan Farm 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 Dawushan Farm with a short position of Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawushan Farm and Kao Fong.
Diversification Opportunities for Dawushan Farm and Kao Fong
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dawushan and Kao is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dawushan Farm Tech 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 Dawushan Farm 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 Dawushan Farm Tech 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 Dawushan Farm i.e., Dawushan Farm and Kao Fong go up and down completely randomly.
Pair Corralation between Dawushan Farm and Kao Fong
Assuming the 90 days trading horizon Dawushan Farm is expected to generate 2.14 times less return on investment than Kao Fong. But when comparing it to its historical volatility, Dawushan Farm Tech is 2.18 times less risky than Kao Fong. It trades about 0.15 of its potential returns per unit of risk. Kao Fong Machinery is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,170 in Kao Fong Machinery on September 2, 2024 and sell it today you would earn a total of 615.00 from holding Kao Fong Machinery or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dawushan Farm Tech vs. Kao Fong Machinery
Performance |
| Timeline |
| Dawushan Farm Tech |
| Kao Fong Machinery |
Dawushan Farm and Kao Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawushan Farm and Kao Fong
The main advantage of trading using opposite Dawushan Farm and Kao Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawushan Farm 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.| Dawushan Farm vs. Taiwan Semiconductor Manufacturing | Dawushan Farm vs. Hon Hai Precision | Dawushan Farm vs. MediaTek | Dawushan Farm vs. Chunghwa Telecom Co |
| Kao Fong vs. Tung Thih Electronic | Kao Fong vs. Golden Biotechnology | Kao Fong vs. GeneFerm Biotechnology Co | Kao Fong vs. Microelectronics Technology |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |