Correlation Between Kindom Construction and Alchip Technologies
Can any of the company-specific risk be diversified away by investing in both Kindom Construction and Alchip Technologies 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 Alchip Technologies 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 Alchip Technologies, you can compare the effects of market volatilities on Kindom Construction and Alchip Technologies 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 Alchip Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindom Construction and Alchip Technologies.
Diversification Opportunities for Kindom Construction and Alchip Technologies
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kindom and Alchip is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and Alchip Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchip Technologies 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 Alchip Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchip Technologies has no effect on the direction of Kindom Construction i.e., Kindom Construction and Alchip Technologies go up and down completely randomly.
Pair Corralation between Kindom Construction and Alchip Technologies
Assuming the 90 days trading horizon Kindom Construction Corp is expected to generate 0.54 times more return on investment than Alchip Technologies. However, Kindom Construction Corp is 1.84 times less risky than Alchip Technologies. It trades about 0.7 of its potential returns per unit of risk. Alchip Technologies is currently generating about 0.07 per unit of risk. If you would invest 4,670 in Kindom Construction Corp on September 4, 2024 and sell it today you would earn a total of 1,310 from holding Kindom Construction Corp or generate 28.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kindom Construction Corp vs. Alchip Technologies
Performance |
| Timeline |
| Kindom Construction Corp |
| Alchip Technologies |
Kindom Construction and Alchip Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kindom Construction and Alchip Technologies
The main advantage of trading using opposite Kindom Construction and Alchip Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kindom Construction position performs unexpectedly, Alchip Technologies 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 Alchip Technologies will offset losses from the drop in Alchip Technologies' 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 |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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