Correlation Between Kuo Toong and Century Wind
Can any of the company-specific risk be diversified away by investing in both Kuo Toong and Century Wind 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 Kuo Toong and Century Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kuo Toong International and Century Wind Power, you can compare the effects of market volatilities on Kuo Toong and Century Wind 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 Kuo Toong with a short position of Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuo Toong and Century Wind.
Diversification Opportunities for Kuo Toong and Century Wind
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kuo and Century is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kuo Toong International and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power and Kuo Toong 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 Kuo Toong International are associated (or correlated) with Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of Kuo Toong i.e., Kuo Toong and Century Wind go up and down completely randomly.
Pair Corralation between Kuo Toong and Century Wind
Assuming the 90 days trading horizon Kuo Toong International is expected to under-perform the Century Wind. In addition to that, Kuo Toong is 2.02 times more volatile than Century Wind Power. It trades about -0.04 of its total potential returns per unit of risk. Century Wind Power is currently generating about -0.01 per unit of volatility. If you would invest 30,250 in Century Wind Power on September 14, 2024 and sell it today you would lose (100.00) from holding Century Wind Power or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kuo Toong International vs. Century Wind Power
Performance |
| Timeline |
| Kuo Toong International |
| Century Wind Power |
Kuo Toong and Century Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuo Toong and Century Wind
The main advantage of trading using opposite Kuo Toong and Century Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuo Toong position performs unexpectedly, Century Wind 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 Century Wind will offset losses from the drop in Century Wind's long position.| Kuo Toong vs. Nankang Rubber Tire | Kuo Toong vs. Rich Development Co | Kuo Toong vs. Kung Sing Engineering | Kuo Toong vs. Advanced Lithium Electrochemistry |
| Century Wind vs. Advanced Wireless Semiconductor | Century Wind vs. Shanghai Commercial Savings | Century Wind vs. Central Reinsurance Corp | Century Wind vs. TWOWAY Communications |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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