Correlation Between Kao Fong and ATrack Technology

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

Diversification Opportunities for Kao Fong and ATrack Technology

0.18

Correlation Coefficient

Kao Fong  ATrack Technology

Average diversification

The 3 months correlation between Kao and ATrack is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kao Fong Machinery and ATrack Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATrack Technology 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 ATrack Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATrack Technology has no effect on the direction of Kao Fong i.e., Kao Fong and ATrack Technology go up and down completely randomly.

Pair Corralation between Kao Fong and ATrack Technology

Assuming the 90 days trading horizon Kao Fong Machinery is expected to generate 0.37 times more return on investment than ATrack Technology. However, Kao Fong Machinery is 2.67 times less risky than ATrack Technology. It trades about -0.28 of its potential returns per unit of risk. ATrack Technology is currently generating about -0.12 per unit of risk. If you would invest  4,860  in Kao Fong Machinery on October 27, 2024 and sell it today you would lose (745.00) from holding Kao Fong Machinery or give up 15.33% of portfolio value over 90 days.

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

Kao Fong Machinery  vs.  ATrack Technology

Kao Fong Machinery

Risk-Adjusted Performance

1 of 100

Weak

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

ATrack Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATrack Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ATrack Technology 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 ATrack Technology

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

The idea behind Kao Fong Machinery and ATrack Technology 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.