Correlation Between Powertech Technology and King Yuan

Can any of the company-specific risk be diversified away by investing in both Powertech 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 Powertech 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 Powertech Technology and King Yuan Electronics, you can compare the effects of market volatilities on Powertech 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 Powertech Technology with a short position of King Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Technology and King Yuan.

Diversification Opportunities for Powertech Technology and King Yuan

-0.34

Correlation Coefficient

Powertech Technology  King Yuan

Very good diversification

The 3 months correlation between Powertech and King is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Powertech 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 Powertech 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 Powertech 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 Powertech Technology i.e., Powertech Technology and King Yuan go up and down completely randomly.

Pair Corralation between Powertech Technology and King Yuan

Assuming the 90 days trading horizon Powertech Technology is expected to under-perform the King Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Powertech Technology is 1.81 times less risky than King Yuan. The stock trades about -0.19 of its potential returns per unit of risk. The King Yuan Electronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11,450  in King Yuan Electronics on September 15, 2024 and sell it today you would earn a total of  450.00  from holding King Yuan Electronics or generate 3.93% return on investment over 90 days.

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

Powertech Technology  vs.  King Yuan Electronics

Powertech Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powertech Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

King Yuan Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in King Yuan Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Powertech Technology and King Yuan

The main advantage of trading using opposite Powertech Technology and King Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech 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 Powertech 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.