Correlation Between Darfon Electronics and New Asia

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

By analyzing existing cross correlation between Darfon Electronics Corp and New Asia Construction, you can compare the effects of market volatilities on Darfon Electronics and New Asia 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 Darfon Electronics with a short position of New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darfon Electronics and New Asia.

Diversification Opportunities for Darfon Electronics and New Asia

0.0

Correlation Coefficient

Darfon Electronics  New Asia

Pay attention - limited upside

The 3 months correlation between Darfon and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Darfon Electronics Corp and New Asia Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Construction and Darfon Electronics 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 Darfon Electronics Corp are associated (or correlated) with New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Construction has no effect on the direction of Darfon Electronics i.e., Darfon Electronics and New Asia go up and down completely randomly.

Pair Corralation between Darfon Electronics and New Asia

If you would invest  1,315  in New Asia Construction on October 8, 2024 and sell it today you would earn a total of  105.00  from holding New Asia Construction or generate 7.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Darfon Electronics Corp  vs.  New Asia Construction

Darfon Electronics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

New Asia Construction

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Asia Construction are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Asia showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Darfon Electronics and New Asia

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

The idea behind Darfon Electronics Corp and New Asia Construction 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.