Correlation Between Kwong Fong and De Licacy
Can any of the company-specific risk be diversified away by investing in both Kwong Fong and De Licacy 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 Kwong Fong and De Licacy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kwong Fong Industries and De Licacy Industrial, you can compare the effects of market volatilities on Kwong Fong and De Licacy 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 Kwong Fong with a short position of De Licacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwong Fong and De Licacy.
Diversification Opportunities for Kwong Fong and De Licacy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kwong and 1464 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kwong Fong Industries and De Licacy Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Licacy Industrial and Kwong Fong 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 Kwong Fong Industries are associated (or correlated) with De Licacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Licacy Industrial has no effect on the direction of Kwong Fong i.e., Kwong Fong and De Licacy go up and down completely randomly.
Pair Corralation between Kwong Fong and De Licacy
Assuming the 90 days trading horizon Kwong Fong Industries is expected to under-perform the De Licacy. But the stock apears to be less risky and, when comparing its historical volatility, Kwong Fong Industries is 2.07 times less risky than De Licacy. The stock trades about -0.13 of its potential returns per unit of risk. The De Licacy Industrial is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,665 in De Licacy Industrial on August 27, 2024 and sell it today you would lose (65.00) from holding De Licacy Industrial or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kwong Fong Industries vs. De Licacy Industrial
Performance |
| Timeline |
| Kwong Fong Industries |
| De Licacy Industrial |
Kwong Fong and De Licacy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwong Fong and De Licacy
The main advantage of trading using opposite Kwong Fong and De Licacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwong Fong position performs unexpectedly, De Licacy 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 De Licacy will offset losses from the drop in De Licacy's long position.| Kwong Fong vs. Taiwan Semiconductor Manufacturing | Kwong Fong vs. Hon Hai Precision | Kwong Fong vs. MediaTek | Kwong Fong vs. Chunghwa Telecom Co |
| De Licacy vs. Taiwan Semiconductor Manufacturing | De Licacy vs. Hon Hai Precision | De Licacy vs. MediaTek | De Licacy vs. Chunghwa Telecom Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |