Correlation Between Kindom Construction and Dawushan Farm
Can any of the company-specific risk be diversified away by investing in both Kindom Construction and Dawushan Farm 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 Dawushan Farm 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 Dawushan Farm Tech, you can compare the effects of market volatilities on Kindom Construction and Dawushan Farm 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 Dawushan Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindom Construction and Dawushan Farm.
Diversification Opportunities for Kindom Construction and Dawushan Farm
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kindom and Dawushan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and Dawushan Farm Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawushan Farm Tech 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 Dawushan Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawushan Farm Tech has no effect on the direction of Kindom Construction i.e., Kindom Construction and Dawushan Farm go up and down completely randomly.
Pair Corralation between Kindom Construction and Dawushan Farm
Assuming the 90 days trading horizon Kindom Construction Corp is expected to generate 0.7 times more return on investment than Dawushan Farm. However, Kindom Construction Corp is 1.43 times less risky than Dawushan Farm. It trades about 0.7 of its potential returns per unit of risk. Dawushan Farm Tech is currently generating about 0.13 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kindom Construction Corp vs. Dawushan Farm Tech
Performance |
| Timeline |
| Kindom Construction Corp |
| Dawushan Farm Tech |
Kindom Construction and Dawushan Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kindom Construction and Dawushan Farm
The main advantage of trading using opposite Kindom Construction and Dawushan Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kindom Construction position performs unexpectedly, Dawushan Farm 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 Dawushan Farm will offset losses from the drop in Dawushan Farm'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 |
| Dawushan Farm vs. Taiwan Semiconductor Manufacturing | Dawushan Farm vs. Hon Hai Precision | Dawushan Farm vs. MediaTek | Dawushan Farm vs. Chunghwa Telecom Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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