Correlation Between Khgears International and Topoint Technology
Can any of the company-specific risk be diversified away by investing in both Khgears International and Topoint Technology 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 Khgears International and Topoint Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Khgears International Limited and Topoint Technology Co, you can compare the effects of market volatilities on Khgears International and Topoint Technology 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 Khgears International with a short position of Topoint Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khgears International and Topoint Technology.
Diversification Opportunities for Khgears International and Topoint Technology
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Khgears and Topoint is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Khgears International Limited and Topoint Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topoint Technology and Khgears International 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 Khgears International Limited are associated (or correlated) with Topoint Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topoint Technology has no effect on the direction of Khgears International i.e., Khgears International and Topoint Technology go up and down completely randomly.
Pair Corralation between Khgears International and Topoint Technology
Assuming the 90 days trading horizon Khgears International Limited is expected to generate 2.79 times more return on investment than Topoint Technology. However, Khgears International is 2.79 times more volatile than Topoint Technology Co. It trades about 0.38 of its potential returns per unit of risk. Topoint Technology Co is currently generating about -0.05 per unit of risk. If you would invest 17,900 in Khgears International Limited on September 23, 2024 and sell it today you would earn a total of 7,300 from holding Khgears International Limited or generate 40.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Khgears International Limited vs. Topoint Technology Co
Performance |
Timeline |
Khgears International |
Topoint Technology |
Khgears International and Topoint Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Khgears International and Topoint Technology
The main advantage of trading using opposite Khgears International and Topoint Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Khgears International position performs unexpectedly, Topoint Technology 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 Topoint Technology will offset losses from the drop in Topoint Technology's long position.Khgears International vs. Ta Liang Technology | Khgears International vs. Mosa Industrial Corp | Khgears International vs. TBI Motion Technology | Khgears International vs. Chang Type Industrial |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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