Correlation Between Li Kang and Min Aik
Can any of the company-specific risk be diversified away by investing in both Li Kang and Min Aik 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 Min Aik 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 Min Aik Technology, you can compare the effects of market volatilities on Li Kang and Min Aik 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 Min Aik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Kang and Min Aik.
Diversification Opportunities for Li Kang and Min Aik
Weak diversification
The 3 months correlation between 6242 and Min is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Li Kang Biomedical and Min Aik Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Min Aik Technology 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 Min Aik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Min Aik Technology has no effect on the direction of Li Kang i.e., Li Kang and Min Aik go up and down completely randomly.
Pair Corralation between Li Kang and Min Aik
Assuming the 90 days trading horizon Li Kang is expected to generate 2.6 times less return on investment than Min Aik. But when comparing it to its historical volatility, Li Kang Biomedical is 1.37 times less risky than Min Aik. It trades about 0.02 of its potential returns per unit of risk. Min Aik Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,631 in Min Aik Technology on September 12, 2024 and sell it today you would earn a total of 704.00 from holding Min Aik Technology or generate 43.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Li Kang Biomedical vs. Min Aik Technology
Performance |
| Timeline |
| Li Kang Biomedical |
| Min Aik Technology |
Li Kang and Min Aik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Kang and Min Aik
The main advantage of trading using opposite Li Kang and Min Aik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Kang position performs unexpectedly, Min Aik 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 Min Aik will offset losses from the drop in Min Aik's long position.| Li Kang vs. Standard Foods Corp | Li Kang vs. Uni President Enterprises Corp | Li Kang vs. Great Wall Enterprise | Li Kang vs. Ruentex Development Co |
| Min Aik vs. AU Optronics | Min Aik vs. Innolux Corp | Min Aik vs. Ruentex Development Co | Min Aik 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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