Correlation Between Kingstate Electronics and Advantech

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

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

Diversification Opportunities for Kingstate Electronics and Advantech

-0.74

Correlation Coefficient

Kingstate Electronics  Advantech

Pay attention - limited upside

The 3 months correlation between Kingstate and Advantech is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kingstate Electronics and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech and Kingstate Electronics 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 Kingstate Electronics are associated (or correlated) with Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of Kingstate Electronics i.e., Kingstate Electronics and Advantech go up and down completely randomly.

Pair Corralation between Kingstate Electronics and Advantech

Assuming the 90 days trading horizon Kingstate Electronics is expected to generate 1.13 times more return on investment than Advantech. However, Kingstate Electronics is 1.13 times more volatile than Advantech Co. It trades about 0.05 of its potential returns per unit of risk. Advantech Co is currently generating about 0.01 per unit of risk. If you would invest  2,930  in Kingstate Electronics on September 23, 2024 and sell it today you would earn a total of  1,235  from holding Kingstate Electronics or generate 42.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Kingstate Electronics  vs.  Advantech Co

Kingstate Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingstate Electronics 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.

Advantech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advantech Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Advantech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Kingstate Electronics and Advantech

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

The idea behind Kingstate Electronics and Advantech 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.