Correlation Between Te Chang and Kindom Construction
Can any of the company-specific risk be diversified away by investing in both Te Chang and Kindom Construction 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 Te Chang and Kindom Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Te Chang Construction and Kindom Construction Corp, you can compare the effects of market volatilities on Te Chang and Kindom Construction 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 Te Chang with a short position of Kindom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Te Chang and Kindom Construction.
Diversification Opportunities for Te Chang and Kindom Construction
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 5511 and Kindom is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Te Chang Construction and Kindom Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kindom Construction Corp and Te Chang 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 Te Chang Construction are associated (or correlated) with Kindom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kindom Construction Corp has no effect on the direction of Te Chang i.e., Te Chang and Kindom Construction go up and down completely randomly.
Pair Corralation between Te Chang and Kindom Construction
Assuming the 90 days trading horizon Te Chang Construction is expected to under-perform the Kindom Construction. But the stock apears to be less risky and, when comparing its historical volatility, Te Chang Construction is 1.79 times less risky than Kindom Construction. The stock trades about -0.02 of its potential returns per unit of risk. The Kindom Construction Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,940 in Kindom Construction Corp on September 1, 2024 and sell it today you would lose (20.00) from holding Kindom Construction Corp or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Te Chang Construction vs. Kindom Construction Corp
Performance |
| Timeline |
| Te Chang Construction |
| Kindom Construction Corp |
Te Chang and Kindom Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Te Chang and Kindom Construction
The main advantage of trading using opposite Te Chang and Kindom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Te Chang position performs unexpectedly, Kindom Construction 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 Kindom Construction will offset losses from the drop in Kindom Construction's long position.| Te Chang vs. Ruentex Development Co | Te Chang vs. United Integrated Services | Te Chang vs. CTCI Corp | Te Chang vs. Continental Holdings Corp |
| Kindom Construction vs. Highwealth Construction Corp | Kindom Construction vs. Cathay Real Estate | Kindom Construction vs. Huaku Development Co | Kindom Construction vs. Hung Sheng Construction |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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