Correlation Between Li Kang and Pacific Construction
Can any of the company-specific risk be diversified away by investing in both Li Kang and Pacific 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 Li Kang and Pacific Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Kang Biomedical and Pacific Construction Co, you can compare the effects of market volatilities on Li Kang and Pacific 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 Li Kang with a short position of Pacific Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Kang and Pacific Construction.
Diversification Opportunities for Li Kang and Pacific Construction
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between 6242 and Pacific is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Li Kang Biomedical and Pacific Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Construction and Li Kang 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 Li Kang Biomedical are associated (or correlated) with Pacific Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Construction has no effect on the direction of Li Kang i.e., Li Kang and Pacific Construction go up and down completely randomly.
Pair Corralation between Li Kang and Pacific Construction
Assuming the 90 days trading horizon Li Kang is expected to generate 33.3 times less return on investment than Pacific Construction. But when comparing it to its historical volatility, Li Kang Biomedical is 2.95 times less risky than Pacific Construction. It trades about 0.03 of its potential returns per unit of risk. Pacific Construction Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,035 in Pacific Construction Co on August 28, 2024 and sell it today you would earn a total of 195.00 from holding Pacific Construction Co or generate 18.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Kang Biomedical vs. Pacific Construction Co
Performance |
| Timeline |
| Li Kang Biomedical |
| Pacific Construction |
Li Kang and Pacific Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Kang and Pacific Construction
The main advantage of trading using opposite Li Kang and Pacific Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Kang position performs unexpectedly, Pacific 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 Pacific Construction will offset losses from the drop in Pacific Construction's long position.| Li Kang vs. Taiwan Cement Corp | Li Kang vs. Ruentex Development Co | Li Kang vs. Symtek Automation Asia | Li Kang vs. CTCI Corp |
| Pacific Construction vs. Chainqui Construction Development | Pacific Construction vs. Zinwell | Pacific Construction vs. Symtek Automation Asia | Pacific Construction vs. CTCI Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |