Correlation Between Kings Town and Run Long
Can any of the company-specific risk be diversified away by investing in both Kings Town and Run Long 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 Kings Town and Run Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kings Town Construction and Run Long Construction, you can compare the effects of market volatilities on Kings Town and Run Long 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 Kings Town with a short position of Run Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kings Town and Run Long.
Diversification Opportunities for Kings Town and Run Long
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kings and Run is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kings Town Construction and Run Long Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Run Long Construction and Kings Town 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 Kings Town Construction are associated (or correlated) with Run Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Run Long Construction has no effect on the direction of Kings Town i.e., Kings Town and Run Long go up and down completely randomly.
Pair Corralation between Kings Town and Run Long
Assuming the 90 days trading horizon Kings Town Construction is expected to generate 2.19 times more return on investment than Run Long. However, Kings Town is 2.19 times more volatile than Run Long Construction. It trades about 0.03 of its potential returns per unit of risk. Run Long Construction is currently generating about -0.53 per unit of risk. If you would invest 7,930 in Kings Town Construction on August 27, 2024 and sell it today you would earn a total of 80.00 from holding Kings Town Construction or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kings Town Construction vs. Run Long Construction
Performance |
| Timeline |
| Kings Town Construction |
| Run Long Construction |
Kings Town and Run Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kings Town and Run Long
The main advantage of trading using opposite Kings Town and Run Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kings Town position performs unexpectedly, Run Long 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 Run Long will offset losses from the drop in Run Long's long position.| Kings Town vs. Kindom Construction Corp | Kings Town vs. Highwealth Construction Corp | Kings Town vs. Hung Sheng Construction | Kings Town vs. Huaku Development Co |
| Run Long vs. Highwealth Construction Corp | Run Long vs. Chong Hong Construction | Run Long vs. Farglory Land Development | Run Long vs. Huaku Development 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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