Correlation Between KS Terminals and Sinbon Electronics

Can any of the company-specific risk be diversified away by investing in both KS Terminals and Sinbon 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 KS Terminals and Sinbon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KS Terminals and Sinbon Electronics Co, you can compare the effects of market volatilities on KS Terminals and Sinbon 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 KS Terminals with a short position of Sinbon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KS Terminals and Sinbon Electronics.

Diversification Opportunities for KS Terminals and Sinbon Electronics

0.78

Correlation Coefficient

KS Terminals  Sinbon Electronics

Poor diversification

The 3 months correlation between 3003 and Sinbon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding KS Terminals and Sinbon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinbon Electronics and KS Terminals 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 KS Terminals are associated (or correlated) with Sinbon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinbon Electronics has no effect on the direction of KS Terminals i.e., KS Terminals and Sinbon Electronics go up and down completely randomly.

Pair Corralation between KS Terminals and Sinbon Electronics

Assuming the 90 days trading horizon KS Terminals is expected to generate 1.06 times more return on investment than Sinbon Electronics. However, KS Terminals is 1.06 times more volatile than Sinbon Electronics Co. It trades about 0.02 of its potential returns per unit of risk. Sinbon Electronics Co is currently generating about 0.0 per unit of risk. If you would invest  7,130  in KS Terminals on September 27, 2024 and sell it today you would earn a total of  770.00  from holding KS Terminals or generate 10.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

KS Terminals  vs.  Sinbon Electronics Co

KS Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KS Terminals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Sinbon Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinbon Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with KS Terminals and Sinbon Electronics

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

The idea behind KS Terminals and Sinbon Electronics Co 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.