Correlation Between Chicony Power and Kingstate Electronics

Can any of the company-specific risk be diversified away by investing in both Chicony Power and Kingstate Electronics 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 Chicony Power and Kingstate Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Chicony Power and Kingstate Electronics

0.31

Correlation Coefficient

Chicony Power  Kingstate Electronics

Weak diversification

The 3 months correlation between Chicony and Kingstate is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chicony Power Technology and Kingstate Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingstate Electronics and Chicony Power 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 Chicony Power Technology are associated (or correlated) with Kingstate Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingstate Electronics has no effect on the direction of Chicony Power i.e., Chicony Power and Kingstate Electronics go up and down completely randomly.

Pair Corralation between Chicony Power and Kingstate Electronics

Assuming the 90 days trading horizon Chicony Power is expected to generate 1.68 times less return on investment than Kingstate Electronics. In addition to that, Chicony Power is 1.97 times more volatile than Kingstate Electronics. It trades about 0.03 of its total potential returns per unit of risk. Kingstate Electronics is currently generating about 0.09 per unit of volatility. If you would invest  4,200  in Kingstate Electronics on December 25, 2024 and sell it today you would earn a total of  160.00  from holding Kingstate Electronics or generate 3.81% return on investment over 90 days.

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

Chicony Power Technology  vs.  Kingstate Electronics

Chicony Power Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chicony Power Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chicony Power is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kingstate Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingstate Electronics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kingstate Electronics 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 Chicony Power and Kingstate Electronics

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

The idea behind Chicony Power Technology and Kingstate 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.