Correlation Between Kindom Construction and Huaku Development
Can any of the company-specific risk be diversified away by investing in both Kindom Construction and Huaku Development 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 Kindom Construction and Huaku Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kindom Construction Corp and Huaku Development Co, you can compare the effects of market volatilities on Kindom Construction and Huaku Development 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 Kindom Construction with a short position of Huaku Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindom Construction and Huaku Development.
Diversification Opportunities for Kindom Construction and Huaku Development
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kindom and Huaku is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and Huaku Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaku Development and Kindom 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 Kindom Construction Corp are associated (or correlated) with Huaku Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaku Development has no effect on the direction of Kindom Construction i.e., Kindom Construction and Huaku Development go up and down completely randomly.
Pair Corralation between Kindom Construction and Huaku Development
Assuming the 90 days trading horizon Kindom Construction Corp is expected to generate 0.62 times more return on investment than Huaku Development. However, Kindom Construction Corp is 1.61 times less risky than Huaku Development. It trades about -0.1 of its potential returns per unit of risk. Huaku Development Co is currently generating about -0.16 per unit of risk. If you would invest 5,090 in Kindom Construction Corp on October 20, 2024 and sell it today you would lose (165.00) from holding Kindom Construction Corp or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kindom Construction Corp vs. Huaku Development Co
Performance |
| Timeline |
| Kindom Construction Corp |
| Huaku Development |
Kindom Construction and Huaku Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kindom Construction and Huaku Development
The main advantage of trading using opposite Kindom Construction and Huaku Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kindom Construction position performs unexpectedly, Huaku Development 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 Huaku Development will offset losses from the drop in Huaku Development's long position.| Kindom Construction vs. Highwealth Construction Corp | Kindom Construction vs. Cathay Real Estate | Kindom Construction vs. Huaku Development Co | Kindom Construction vs. Hung Sheng Construction |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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