Correlation Between Kingclean Electric and Union Semiconductor

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

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

Diversification Opportunities for Kingclean Electric and Union Semiconductor

0.85

Correlation Coefficient

Kingclean Electric  Union Semiconductor

Very poor diversification

The 3 months correlation between Kingclean and Union is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kingclean Electric Co and Union Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Semiconductor and Kingclean Electric 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 Kingclean Electric Co are associated (or correlated) with Union Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Semiconductor has no effect on the direction of Kingclean Electric i.e., Kingclean Electric and Union Semiconductor go up and down completely randomly.

Pair Corralation between Kingclean Electric and Union Semiconductor

Assuming the 90 days trading horizon Kingclean Electric Co is expected to generate 0.94 times more return on investment than Union Semiconductor. However, Kingclean Electric Co is 1.07 times less risky than Union Semiconductor. It trades about -0.03 of its potential returns per unit of risk. Union Semiconductor Co is currently generating about -0.17 per unit of risk. If you would invest  2,327  in Kingclean Electric Co on September 19, 2024 and sell it today you would lose (28.00) from holding Kingclean Electric Co or give up 1.2% of portfolio value over 90 days.

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

Kingclean Electric Co  vs.  Union Semiconductor Co

Kingclean Electric

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kingclean Electric Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kingclean Electric sustained solid returns over the last few months and may actually be approaching a breakup point.

Union Semiconductor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Union Semiconductor Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Union Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingclean Electric and Union Semiconductor

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

The idea behind Kingclean Electric Co and Union Semiconductor 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.