Correlation Between Yeou Yih and Kao Fong
Can any of the company-specific risk be diversified away by investing in both Yeou Yih 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 Yeou Yih and Kao Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yeou Yih Steel and Kao Fong Machinery, you can compare the effects of market volatilities on Yeou Yih 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 Yeou Yih with a short position of Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yeou Yih and Kao Fong.
Diversification Opportunities for Yeou Yih and Kao Fong
Good diversification
The 3 months correlation between Yeou and Kao is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Yeou Yih Steel 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 Yeou Yih 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 Yeou Yih Steel 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 Yeou Yih i.e., Yeou Yih and Kao Fong go up and down completely randomly.
Pair Corralation between Yeou Yih and Kao Fong
Assuming the 90 days trading horizon Yeou Yih Steel is expected to under-perform the Kao Fong. But the stock apears to be less risky and, when comparing its historical volatility, Yeou Yih Steel is 7.71 times less risky than Kao Fong. The stock trades about -0.08 of its potential returns per unit of risk. The 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yeou Yih Steel vs. Kao Fong Machinery
Performance |
| Timeline |
| Yeou Yih Steel |
| Kao Fong Machinery |
Yeou Yih and Kao Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yeou Yih and Kao Fong
The main advantage of trading using opposite Yeou Yih and Kao Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yeou Yih 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.| Yeou Yih vs. Lung Hwa Electronics | Yeou Yih vs. WT Microelectronics Co | Yeou Yih vs. Universal Microelectronics Co | Yeou Yih vs. Professional Computer Technology |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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