Correlation Between Lee Chi and Kaulin Mfg
Can any of the company-specific risk be diversified away by investing in both Lee Chi and Kaulin Mfg 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 Lee Chi and Kaulin Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lee Chi Enterprises and Kaulin Mfg, you can compare the effects of market volatilities on Lee Chi and Kaulin Mfg 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 Lee Chi with a short position of Kaulin Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lee Chi and Kaulin Mfg.
Diversification Opportunities for Lee Chi and Kaulin Mfg
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lee and Kaulin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lee Chi Enterprises and Kaulin Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaulin Mfg and Lee Chi 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 Lee Chi Enterprises are associated (or correlated) with Kaulin Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaulin Mfg has no effect on the direction of Lee Chi i.e., Lee Chi and Kaulin Mfg go up and down completely randomly.
Pair Corralation between Lee Chi and Kaulin Mfg
Assuming the 90 days trading horizon Lee Chi is expected to generate 1.34 times less return on investment than Kaulin Mfg. In addition to that, Lee Chi is 1.36 times more volatile than Kaulin Mfg. It trades about 0.34 of its total potential returns per unit of risk. Kaulin Mfg is currently generating about 0.63 per unit of volatility. If you would invest 1,330 in Kaulin Mfg on November 28, 2024 and sell it today you would earn a total of 115.00 from holding Kaulin Mfg or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Lee Chi Enterprises vs. Kaulin Mfg
Performance |
| Timeline |
| Lee Chi Enterprises |
| Kaulin Mfg |
Lee Chi and Kaulin Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lee Chi and Kaulin Mfg
The main advantage of trading using opposite Lee Chi and Kaulin Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lee Chi position performs unexpectedly, Kaulin Mfg 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 Kaulin Mfg will offset losses from the drop in Kaulin Mfg's long position.| Lee Chi vs. Anderson Industrial Corp | Lee Chi vs. Kaulin Mfg | Lee Chi vs. Awea Mechantronic Co | Lee Chi vs. Everlight Chemical Industrial |
| Kaulin Mfg vs. Tainan Enterprises Co | Kaulin Mfg vs. Nien Hsing Textile | Kaulin Mfg vs. De Licacy Industrial | Kaulin Mfg vs. Kwong Fong Industries |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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