Correlation Between Ambassador Hotel and Kingstate Electronics
Can any of the company-specific risk be diversified away by investing in both Ambassador Hotel and Kingstate Electronics 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 Ambassador Hotel and Kingstate Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambassador Hotel and Kingstate Electronics, you can compare the effects of market volatilities on Ambassador Hotel and Kingstate Electronics 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 Ambassador Hotel with a short position of Kingstate Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambassador Hotel and Kingstate Electronics.
Diversification Opportunities for Ambassador Hotel and Kingstate Electronics
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ambassador and Kingstate is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ambassador Hotel and Kingstate Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstate Electronics and Ambassador Hotel 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 Ambassador Hotel are associated (or correlated) with Kingstate Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstate Electronics has no effect on the direction of Ambassador Hotel i.e., Ambassador Hotel and Kingstate Electronics go up and down completely randomly.
Pair Corralation between Ambassador Hotel and Kingstate Electronics
Assuming the 90 days trading horizon Ambassador Hotel is expected to under-perform the Kingstate Electronics. In addition to that, Ambassador Hotel is 1.81 times more volatile than Kingstate Electronics. It trades about -0.22 of its total potential returns per unit of risk. Kingstate Electronics is currently generating about -0.21 per unit of volatility. If you would invest 4,330 in Kingstate Electronics on September 24, 2024 and sell it today you would lose (165.00) from holding Kingstate Electronics or give up 3.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Ambassador Hotel vs. Kingstate Electronics
Performance |
Timeline |
Ambassador Hotel |
Kingstate Electronics |
Ambassador Hotel and Kingstate Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ambassador Hotel and Kingstate Electronics
The main advantage of trading using opposite Ambassador Hotel and Kingstate Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambassador Hotel position performs unexpectedly, Kingstate Electronics 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 Kingstate Electronics will offset losses from the drop in Kingstate Electronics' long position.Ambassador Hotel vs. Merida Industry Co | Ambassador Hotel vs. Cheng Shin Rubber | Ambassador Hotel vs. Uni President Enterprises Corp | Ambassador Hotel vs. Pou Chen Corp |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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