Correlation Between Kindom Construction and WINSON Machinery
Can any of the company-specific risk be diversified away by investing in both Kindom Construction and WINSON Machinery 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 WINSON Machinery 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 WINSON Machinery Co, you can compare the effects of market volatilities on Kindom Construction and WINSON Machinery 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 WINSON Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindom Construction and WINSON Machinery.
Diversification Opportunities for Kindom Construction and WINSON Machinery
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kindom and WINSON is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and WINSON Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINSON Machinery 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 WINSON Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINSON Machinery has no effect on the direction of Kindom Construction i.e., Kindom Construction and WINSON Machinery go up and down completely randomly.
Pair Corralation between Kindom Construction and WINSON Machinery
Assuming the 90 days trading horizon Kindom Construction Corp is expected to generate 2.12 times more return on investment than WINSON Machinery. However, Kindom Construction is 2.12 times more volatile than WINSON Machinery Co. It trades about 0.66 of its potential returns per unit of risk. WINSON Machinery Co is currently generating about 0.47 per unit of risk. If you would invest 5,120 in Kindom Construction Corp on November 28, 2024 and sell it today you would earn a total of 620.00 from holding Kindom Construction Corp or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Kindom Construction Corp vs. WINSON Machinery Co
Performance |
| Timeline |
| Kindom Construction Corp |
| WINSON Machinery |
Kindom Construction and WINSON Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kindom Construction and WINSON Machinery
The main advantage of trading using opposite Kindom Construction and WINSON Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kindom Construction position performs unexpectedly, WINSON Machinery 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 WINSON Machinery will offset losses from the drop in WINSON Machinery'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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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