Correlation Between Chipbond Technology and King Yuan

Can any of the company-specific risk be diversified away by investing in both Chipbond Technology and King Yuan 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 Chipbond Technology and King Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chipbond Technology and King Yuan Electronics, you can compare the effects of market volatilities on Chipbond Technology and King Yuan 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 Chipbond Technology with a short position of King Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipbond Technology and King Yuan.

Diversification Opportunities for Chipbond Technology and King Yuan

-0.05

Correlation Coefficient

Chipbond Technology  King Yuan

Good diversification

The 3 months correlation between Chipbond and King is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chipbond Technology and King Yuan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Yuan Electronics and Chipbond Technology 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 Chipbond Technology are associated (or correlated) with King Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Yuan Electronics has no effect on the direction of Chipbond Technology i.e., Chipbond Technology and King Yuan go up and down completely randomly.

Pair Corralation between Chipbond Technology and King Yuan

Assuming the 90 days trading horizon Chipbond Technology is expected to under-perform the King Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Chipbond Technology is 1.81 times less risky than King Yuan. The stock trades about -0.01 of its potential returns per unit of risk. The King Yuan Electronics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11,750  in King Yuan Electronics on October 11, 2024 and sell it today you would earn a total of  100.00  from holding King Yuan Electronics or generate 0.85% return on investment over 90 days.

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

Chipbond Technology  vs.  King Yuan Electronics

Chipbond Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chipbond Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chipbond Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

King Yuan Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Chipbond Technology and King Yuan Electronics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.