Correlation Between Pacific Construction and Kindom Construction
Can any of the company-specific risk be diversified away by investing in both Pacific Construction and Kindom Construction 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 Pacific Construction and Kindom Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Construction Co and Kindom Construction Corp, you can compare the effects of market volatilities on Pacific Construction and Kindom Construction 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 Pacific Construction with a short position of Kindom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Construction and Kindom Construction.
Diversification Opportunities for Pacific Construction and Kindom Construction
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacific and Kindom is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Construction Co and Kindom Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kindom Construction Corp and Pacific Construction 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 Pacific Construction Co are associated (or correlated) with Kindom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kindom Construction Corp has no effect on the direction of Pacific Construction i.e., Pacific Construction and Kindom Construction go up and down completely randomly.
Pair Corralation between Pacific Construction and Kindom Construction
Assuming the 90 days trading horizon Pacific Construction Co is expected to under-perform the Kindom Construction. But the stock apears to be less risky and, when comparing its historical volatility, Pacific Construction Co is 1.16 times less risky than Kindom Construction. The stock trades about -0.01 of its potential returns per unit of risk. The Kindom Construction Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,940 in Kindom Construction Corp on September 1, 2024 and sell it today you would lose (20.00) from holding Kindom Construction Corp or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Construction Co vs. Kindom Construction Corp
Performance |
| Timeline |
| Pacific Construction |
| Kindom Construction Corp |
Pacific Construction and Kindom Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Construction and Kindom Construction
The main advantage of trading using opposite Pacific Construction and Kindom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Construction position performs unexpectedly, Kindom Construction 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 Kindom Construction will offset losses from the drop in Kindom Construction's long position.| Pacific Construction vs. Cathay Real Estate | Pacific Construction vs. Goldsun Building Materials | Pacific Construction vs. Kindom Construction Corp | Pacific Construction vs. Prince Housing Development |
| Kindom Construction vs. Highwealth Construction Corp | Kindom Construction vs. Cathay Real Estate | Kindom Construction vs. Huaku Development Co | Kindom Construction vs. Hung Sheng Construction |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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