Correlation Between BenQ Materials and Kunyue Development
Can any of the company-specific risk be diversified away by investing in both BenQ Materials and Kunyue Development 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 BenQ Materials and Kunyue Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BenQ Materials Corp and Kunyue Development Co, you can compare the effects of market volatilities on BenQ Materials and Kunyue Development 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 BenQ Materials with a short position of Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Materials and Kunyue Development.
Diversification Opportunities for BenQ Materials and Kunyue Development
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BenQ and Kunyue is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of BenQ Materials i.e., BenQ Materials and Kunyue Development go up and down completely randomly.
Pair Corralation between BenQ Materials and Kunyue Development
Assuming the 90 days trading horizon BenQ Materials is expected to generate 11.66 times less return on investment than Kunyue Development. But when comparing it to its historical volatility, BenQ Materials Corp is 1.72 times less risky than Kunyue Development. It trades about 0.03 of its potential returns per unit of risk. Kunyue Development Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,590 in Kunyue Development Co on September 2, 2024 and sell it today you would earn a total of 510.00 from holding Kunyue Development Co or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BenQ Materials Corp vs. Kunyue Development Co
Performance |
| Timeline |
| BenQ Materials Corp |
| Kunyue Development |
BenQ Materials and Kunyue Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BenQ Materials and Kunyue Development
The main advantage of trading using opposite BenQ Materials and Kunyue Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BenQ Materials position performs unexpectedly, Kunyue Development 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 Kunyue Development will offset losses from the drop in Kunyue Development's long position.The idea behind BenQ Materials Corp and Kunyue Development Co 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.| Kunyue Development vs. Baotek Industrial Materials | Kunyue Development vs. Wei Chuan Foods | Kunyue Development vs. ALFORMER Industrial Co | Kunyue Development vs. Fu Burg Industrial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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