Correlation Between Kao Fong and Est Global

Can any of the company-specific risk be diversified away by investing in both Kao Fong and Est Global 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 Est Global 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 Est Global Apparel, you can compare the effects of market volatilities on Kao Fong and Est Global 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 Est Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kao Fong and Est Global.

Diversification Opportunities for Kao Fong and Est Global

0.53

Correlation Coefficient

Kao Fong  Est Global

Very weak diversification

The 3 months correlation between Kao and Est is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kao Fong Machinery and Est Global Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Est Global Apparel 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 Est Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Est Global Apparel has no effect on the direction of Kao Fong i.e., Kao Fong and Est Global go up and down completely randomly.

Pair Corralation between Kao Fong and Est Global

Assuming the 90 days trading horizon Kao Fong is expected to generate 1.16 times less return on investment than Est Global. In addition to that, Kao Fong is 1.7 times more volatile than Est Global Apparel. It trades about 0.04 of its total potential returns per unit of risk. Est Global Apparel is currently generating about 0.07 per unit of volatility. If you would invest  1,685  in Est Global Apparel on December 20, 2024 and sell it today you would earn a total of  135.00  from holding Est Global Apparel or generate 8.01% return on investment over 90 days.

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

Kao Fong Machinery  vs.  Est Global Apparel

Kao Fong Machinery

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kao Fong Machinery are ranked lower than 2 (%) 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 April 2025.

Est Global Apparel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Est Global Apparel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Est Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kao Fong and Est Global

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

The idea behind Kao Fong Machinery and Est Global Apparel 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 Global Correlations module to find global opportunities by holding instruments from different markets.