Correlation Between WINSON Machinery and Li Kang
Can any of the company-specific risk be diversified away by investing in both WINSON Machinery and Li Kang 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 WINSON Machinery and Li Kang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WINSON Machinery Co and Li Kang Biomedical, you can compare the effects of market volatilities on WINSON Machinery and Li Kang 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 WINSON Machinery with a short position of Li Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of WINSON Machinery and Li Kang.
Diversification Opportunities for WINSON Machinery and Li Kang
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WINSON and 6242 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding WINSON Machinery Co and Li Kang Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Kang Biomedical and WINSON Machinery 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 WINSON Machinery Co are associated (or correlated) with Li Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Kang Biomedical has no effect on the direction of WINSON Machinery i.e., WINSON Machinery and Li Kang go up and down completely randomly.
Pair Corralation between WINSON Machinery and Li Kang
Assuming the 90 days trading horizon WINSON Machinery Co is expected to under-perform the Li Kang. In addition to that, WINSON Machinery is 1.51 times more volatile than Li Kang Biomedical. It trades about -0.15 of its total potential returns per unit of risk. Li Kang Biomedical is currently generating about -0.05 per unit of volatility. If you would invest 4,345 in Li Kang Biomedical on August 24, 2024 and sell it today you would lose (45.00) from holding Li Kang Biomedical or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WINSON Machinery Co vs. Li Kang Biomedical
Performance |
| Timeline |
| WINSON Machinery |
| Li Kang Biomedical |
WINSON Machinery and Li Kang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WINSON Machinery and Li Kang
The main advantage of trading using opposite WINSON Machinery and Li Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WINSON Machinery position performs unexpectedly, Li Kang 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 Li Kang will offset losses from the drop in Li Kang's long position.| WINSON Machinery vs. Cheng Shin Rubber | WINSON Machinery vs. TSRC Corp | WINSON Machinery vs. Taiwan Cement Corp | WINSON Machinery vs. China Steel Chemical |
| Li Kang vs. Lian Hwa Foods | Li Kang vs. Uni President Enterprises Corp | Li Kang vs. Taiwan Cement Corp | Li Kang vs. Ruentex 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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