Correlation Between King Yuan and Visual Photonics

Can any of the company-specific risk be diversified away by investing in both King Yuan and Visual Photonics 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 King Yuan and Visual Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between King Yuan Electronics and Visual Photonics Epitaxy, you can compare the effects of market volatilities on King Yuan and Visual Photonics 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 King Yuan with a short position of Visual Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of King Yuan and Visual Photonics.

Diversification Opportunities for King Yuan and Visual Photonics

-0.43

Correlation Coefficient

King Yuan  Visual Photonics

Very good diversification

The 3 months correlation between King and Visual is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding King Yuan Electronics and Visual Photonics Epitaxy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visual Photonics Epitaxy and King Yuan 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 King Yuan Electronics are associated (or correlated) with Visual Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visual Photonics Epitaxy has no effect on the direction of King Yuan i.e., King Yuan and Visual Photonics go up and down completely randomly.

Pair Corralation between King Yuan and Visual Photonics

Assuming the 90 days trading horizon King Yuan Electronics is expected to generate 0.89 times more return on investment than Visual Photonics. However, King Yuan Electronics is 1.13 times less risky than Visual Photonics. It trades about 0.1 of its potential returns per unit of risk. Visual Photonics Epitaxy is currently generating about 0.06 per unit of risk. If you would invest  3,795  in King Yuan Electronics on October 10, 2024 and sell it today you would earn a total of  8,155  from holding King Yuan Electronics or generate 214.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

King Yuan Electronics  vs.  Visual Photonics Epitaxy

King Yuan Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days King Yuan Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, King Yuan is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Visual Photonics Epitaxy

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Visual Photonics Epitaxy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Visual Photonics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with King Yuan and Visual Photonics

The main advantage of trading using opposite King Yuan and Visual Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Yuan position performs unexpectedly, Visual Photonics 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 Visual Photonics will offset losses from the drop in Visual Photonics' long position.

The idea behind King Yuan Electronics and Visual Photonics Epitaxy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.