Correlation Between Kao Fong and Airtac International

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

By analyzing existing cross correlation between Kao Fong Machinery and Airtac International Group, you can compare the effects of market volatilities on Kao Fong and Airtac International 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 Kao Fong with a short position of Airtac International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kao Fong and Airtac International.

Diversification Opportunities for Kao Fong and Airtac International

-0.42

Correlation Coefficient

Kao Fong  Airtac International

Very good diversification

The 3 months correlation between Kao and Airtac is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kao Fong Machinery and Airtac International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtac International and Kao Fong 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 Kao Fong Machinery are associated (or correlated) with Airtac International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtac International has no effect on the direction of Kao Fong i.e., Kao Fong and Airtac International go up and down completely randomly.

Pair Corralation between Kao Fong and Airtac International

Assuming the 90 days trading horizon Kao Fong Machinery is expected to generate 1.91 times more return on investment than Airtac International. However, Kao Fong is 1.91 times more volatile than Airtac International Group. It trades about 0.14 of its potential returns per unit of risk. Airtac International Group is currently generating about -0.02 per unit of risk. If you would invest  4,330  in Kao Fong Machinery on September 24, 2024 and sell it today you would earn a total of  570.00  from holding Kao Fong Machinery or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Kao Fong Machinery  vs.  Airtac International Group

Kao Fong Machinery

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kao Fong Machinery are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kao Fong may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Airtac International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Airtac International Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Airtac International 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 Kao Fong and Airtac International

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

The idea behind Kao Fong Machinery and Airtac International Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.