Correlation Between Ma Kuang and Kunyue Development
Can any of the company-specific risk be diversified away by investing in both Ma Kuang and Kunyue Development 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 Ma Kuang and Kunyue Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ma Kuang Healthcare and Kunyue Development Co, you can compare the effects of market volatilities on Ma Kuang and Kunyue Development 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 Ma Kuang with a short position of Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ma Kuang and Kunyue Development.
Diversification Opportunities for Ma Kuang and Kunyue Development
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between 4139 and Kunyue is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development and Ma Kuang 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 Ma Kuang Healthcare are associated (or correlated) with Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of Ma Kuang i.e., Ma Kuang and Kunyue Development go up and down completely randomly.
Pair Corralation between Ma Kuang and Kunyue Development
Assuming the 90 days trading horizon Ma Kuang Healthcare is expected to under-perform the Kunyue Development. But the stock apears to be less risky and, when comparing its historical volatility, Ma Kuang Healthcare is 2.96 times less risky than Kunyue Development. The stock trades about -0.01 of its potential returns per unit of risk. The Kunyue Development Co is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,675 in Kunyue Development Co on September 14, 2024 and sell it today you would earn a total of 485.00 from holding Kunyue Development Co or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ma Kuang Healthcare vs. Kunyue Development Co
Performance |
| Timeline |
| Ma Kuang Healthcare |
| Kunyue Development |
Ma Kuang and Kunyue Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ma Kuang and Kunyue Development
The main advantage of trading using opposite Ma Kuang and Kunyue Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ma Kuang position performs unexpectedly, Kunyue Development 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 Kunyue Development will offset losses from the drop in Kunyue Development's long position.| Ma Kuang vs. Kedge Construction Co | Ma Kuang vs. MedFirst Healthcare Services | Ma Kuang vs. Pacific Construction Co | Ma Kuang vs. Ambassador Hotel |
| Kunyue Development vs. Chong Hong Construction | Kunyue Development vs. Ruentex Development Co | Kunyue Development vs. Symtek Automation Asia | Kunyue Development vs. WiseChip Semiconductor |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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