Correlation Between Konfoong Materials and Union Semiconductor

Can any of the company-specific risk be diversified away by investing in both Konfoong Materials and Union Semiconductor 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 Konfoong Materials and Union Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Konfoong Materials International and Union Semiconductor Co, you can compare the effects of market volatilities on Konfoong Materials and Union Semiconductor 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 Konfoong Materials with a short position of Union Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Konfoong Materials and Union Semiconductor.

Diversification Opportunities for Konfoong Materials and Union Semiconductor

0.72

Correlation Coefficient

Konfoong Materials  Union Semiconductor

Poor diversification

The 3 months correlation between Konfoong and Union is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Konfoong Materials Internation and Union Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Semiconductor and Konfoong Materials 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 Konfoong Materials International are associated (or correlated) with Union Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Semiconductor has no effect on the direction of Konfoong Materials i.e., Konfoong Materials and Union Semiconductor go up and down completely randomly.

Pair Corralation between Konfoong Materials and Union Semiconductor

Assuming the 90 days trading horizon Konfoong Materials International is expected to under-perform the Union Semiconductor. In addition to that, Konfoong Materials is 1.07 times more volatile than Union Semiconductor Co. It trades about -0.02 of its total potential returns per unit of risk. Union Semiconductor Co is currently generating about 0.03 per unit of volatility. If you would invest  948.00  in Union Semiconductor Co on December 26, 2024 and sell it today you would earn a total of  25.00  from holding Union Semiconductor Co or generate 2.64% return on investment over 90 days.

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

Konfoong Materials Internation  vs.  Union Semiconductor Co

Konfoong Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Konfoong Materials International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Konfoong Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Union Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Union Semiconductor Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Union Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Konfoong Materials and Union Semiconductor

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

The idea behind Konfoong Materials International and Union Semiconductor 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.