Correlation Between Kindom Construction and Hsinli Chemical
Can any of the company-specific risk be diversified away by investing in both Kindom Construction and Hsinli Chemical 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 Hsinli Chemical 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 Hsinli Chemical Industrial, you can compare the effects of market volatilities on Kindom Construction and Hsinli Chemical 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 Hsinli Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindom Construction and Hsinli Chemical.
Diversification Opportunities for Kindom Construction and Hsinli Chemical
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kindom and Hsinli is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and Hsinli Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsinli Chemical Indu 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 Hsinli Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsinli Chemical Indu has no effect on the direction of Kindom Construction i.e., Kindom Construction and Hsinli Chemical go up and down completely randomly.
Pair Corralation between Kindom Construction and Hsinli Chemical
Assuming the 90 days trading horizon Kindom Construction is expected to generate 1.73 times less return on investment than Hsinli Chemical. But when comparing it to its historical volatility, Kindom Construction Corp is 1.61 times less risky than Hsinli Chemical. It trades about 0.09 of its potential returns per unit of risk. Hsinli Chemical Industrial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,585 in Hsinli Chemical Industrial on September 3, 2024 and sell it today you would earn a total of 3,995 from holding Hsinli Chemical Industrial or generate 252.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Kindom Construction Corp vs. Hsinli Chemical Industrial
Performance |
| Timeline |
| Kindom Construction Corp |
| Hsinli Chemical Indu |
Kindom Construction and Hsinli Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kindom Construction and Hsinli Chemical
The main advantage of trading using opposite Kindom Construction and Hsinli Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kindom Construction position performs unexpectedly, Hsinli Chemical 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 Hsinli Chemical will offset losses from the drop in Hsinli Chemical's long position.| Kindom Construction vs. Huaku Development Co | Kindom Construction vs. Ruentex Development Co | Kindom Construction vs. Taiwan Cement Corp | Kindom Construction vs. Symtek Automation Asia |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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