Correlation Between Kaulin Mfg and Kwong Fong
Can any of the company-specific risk be diversified away by investing in both Kaulin Mfg and Kwong Fong 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 Kaulin Mfg and Kwong Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaulin Mfg and Kwong Fong Industries, you can compare the effects of market volatilities on Kaulin Mfg and Kwong Fong 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 Kaulin Mfg with a short position of Kwong Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaulin Mfg and Kwong Fong.
Diversification Opportunities for Kaulin Mfg and Kwong Fong
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kaulin and Kwong is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kaulin Mfg and Kwong Fong Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwong Fong Industries and Kaulin Mfg 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 Kaulin Mfg are associated (or correlated) with Kwong Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwong Fong Industries has no effect on the direction of Kaulin Mfg i.e., Kaulin Mfg and Kwong Fong go up and down completely randomly.
Pair Corralation between Kaulin Mfg and Kwong Fong
Assuming the 90 days trading horizon Kaulin Mfg is expected to generate 3.02 times more return on investment than Kwong Fong. However, Kaulin Mfg is 3.02 times more volatile than Kwong Fong Industries. It trades about 0.17 of its potential returns per unit of risk. Kwong Fong Industries is currently generating about -0.19 per unit of risk. If you would invest 1,440 in Kaulin Mfg on August 30, 2024 and sell it today you would earn a total of 230.00 from holding Kaulin Mfg or generate 15.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaulin Mfg vs. Kwong Fong Industries
Performance |
| Timeline |
| Kaulin Mfg |
| Kwong Fong Industries |
Kaulin Mfg and Kwong Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaulin Mfg and Kwong Fong
The main advantage of trading using opposite Kaulin Mfg and Kwong Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaulin Mfg position performs unexpectedly, Kwong Fong 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 Kwong Fong will offset losses from the drop in Kwong Fong's long position.| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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