Correlation Between Kuo Toong and Yem Chio
Can any of the company-specific risk be diversified away by investing in both Kuo Toong and Yem Chio 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 Yem Chio 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 Yem Chio Co, you can compare the effects of market volatilities on Kuo Toong and Yem Chio 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 Yem Chio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuo Toong and Yem Chio.
Diversification Opportunities for Kuo Toong and Yem Chio
Poor diversification
The 3 months correlation between Kuo and Yem is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kuo Toong International and Yem Chio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yem Chio 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 Yem Chio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yem Chio has no effect on the direction of Kuo Toong i.e., Kuo Toong and Yem Chio go up and down completely randomly.
Pair Corralation between Kuo Toong and Yem Chio
Assuming the 90 days trading horizon Kuo Toong International is expected to generate 1.64 times more return on investment than Yem Chio. However, Kuo Toong is 1.64 times more volatile than Yem Chio Co. It trades about 0.02 of its potential returns per unit of risk. Yem Chio Co is currently generating about 0.0 per unit of risk. If you would invest 5,000 in Kuo Toong International on September 12, 2024 and sell it today you would earn a total of 330.00 from holding Kuo Toong International or generate 6.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Kuo Toong International vs. Yem Chio Co
Performance |
Timeline |
Kuo Toong International |
Yem Chio |
Kuo Toong and Yem Chio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kuo Toong and Yem Chio
The main advantage of trading using opposite Kuo Toong and Yem Chio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuo Toong position performs unexpectedly, Yem Chio 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 Yem Chio will offset losses from the drop in Yem Chio'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 |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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