Correlation Between Federal Corp and Kenda Rubber
Can any of the company-specific risk be diversified away by investing in both Federal Corp and Kenda Rubber 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 Federal Corp and Kenda Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Corp and Kenda Rubber Industrial, you can compare the effects of market volatilities on Federal Corp and Kenda Rubber 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 Federal Corp with a short position of Kenda Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Corp and Kenda Rubber.
Diversification Opportunities for Federal Corp and Kenda Rubber
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Federal and Kenda is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Federal Corp and Kenda Rubber Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenda Rubber Industrial and Federal Corp 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 Federal Corp are associated (or correlated) with Kenda Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenda Rubber Industrial has no effect on the direction of Federal Corp i.e., Federal Corp and Kenda Rubber go up and down completely randomly.
Pair Corralation between Federal Corp and Kenda Rubber
Assuming the 90 days trading horizon Federal Corp is expected to under-perform the Kenda Rubber. In addition to that, Federal Corp is 1.3 times more volatile than Kenda Rubber Industrial. It trades about -0.14 of its total potential returns per unit of risk. Kenda Rubber Industrial is currently generating about 0.02 per unit of volatility. If you would invest 2,670 in Kenda Rubber Industrial on December 29, 2024 and sell it today you would earn a total of 30.00 from holding Kenda Rubber Industrial or generate 1.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.25% |
Values | Daily Returns |
Federal Corp vs. Kenda Rubber Industrial
Performance |
Timeline |
Federal Corp |
Kenda Rubber Industrial |
Risk-Adjusted Performance
Weak
Weak | Strong |
Federal Corp and Kenda Rubber Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federal Corp and Kenda Rubber
The main advantage of trading using opposite Federal Corp and Kenda Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Corp position performs unexpectedly, Kenda Rubber 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 Kenda Rubber will offset losses from the drop in Kenda Rubber's long position.Federal Corp vs. Nankang Rubber Tire | Federal Corp vs. Formosan Rubber Group | Federal Corp vs. Yulon Motor Co | Federal Corp vs. Chung Hwa Pulp |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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