Correlation Between Alchip Technologies and Kuo Toong

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

By analyzing existing cross correlation between Alchip Technologies and Kuo Toong International, you can compare the effects of market volatilities on Alchip Technologies and Kuo Toong 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 Alchip Technologies with a short position of Kuo Toong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alchip Technologies and Kuo Toong.

Diversification Opportunities for Alchip Technologies and Kuo Toong

-0.16

Correlation Coefficient

Alchip Technologies  Kuo Toong

Good diversification

The 3 months correlation between Alchip and Kuo is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alchip Technologies and Kuo Toong International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuo Toong International and Alchip Technologies 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 Alchip Technologies are associated (or correlated) with Kuo Toong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuo Toong International has no effect on the direction of Alchip Technologies i.e., Alchip Technologies and Kuo Toong go up and down completely randomly.

Pair Corralation between Alchip Technologies and Kuo Toong

Assuming the 90 days trading horizon Alchip Technologies is expected to under-perform the Kuo Toong. In addition to that, Alchip Technologies is 1.83 times more volatile than Kuo Toong International. It trades about -0.06 of its total potential returns per unit of risk. Kuo Toong International is currently generating about 0.12 per unit of volatility. If you would invest  5,110  in Kuo Toong International on December 21, 2024 and sell it today you would earn a total of  610.00  from holding Kuo Toong International or generate 11.94% return on investment over 90 days.

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

Alchip Technologies  vs.  Kuo Toong International

Alchip Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alchip Technologies 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Kuo Toong International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kuo Toong International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kuo Toong showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alchip Technologies and Kuo Toong

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

The idea behind Alchip Technologies and Kuo Toong International 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.