Correlation Between Li Kang and Dynamic Medical
Can any of the company-specific risk be diversified away by investing in both Li Kang and Dynamic Medical 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 Dynamic Medical 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 Dynamic Medical Technologies, you can compare the effects of market volatilities on Li Kang and Dynamic Medical 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 Dynamic Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Kang and Dynamic Medical.
Diversification Opportunities for Li Kang and Dynamic Medical
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 6242 and Dynamic is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Li Kang Biomedical and Dynamic Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Medical Tech 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 Dynamic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Medical Tech has no effect on the direction of Li Kang i.e., Li Kang and Dynamic Medical go up and down completely randomly.
Pair Corralation between Li Kang and Dynamic Medical
Assuming the 90 days trading horizon Li Kang is expected to generate 4.98 times less return on investment than Dynamic Medical. But when comparing it to its historical volatility, Li Kang Biomedical is 1.43 times less risky than Dynamic Medical. It trades about 0.01 of its potential returns per unit of risk. Dynamic Medical Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,436 in Dynamic Medical Technologies on October 25, 2024 and sell it today you would earn a total of 2,554 from holding Dynamic Medical Technologies or generate 39.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Li Kang Biomedical vs. Dynamic Medical Technologies
Performance |
| Timeline |
| Li Kang Biomedical |
| Dynamic Medical Tech |
Li Kang and Dynamic Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Kang and Dynamic Medical
The main advantage of trading using opposite Li Kang and Dynamic Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Kang position performs unexpectedly, Dynamic Medical 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 Dynamic Medical will offset losses from the drop in Dynamic Medical's long position.| Li Kang vs. Dawushan Farm Tech | Li Kang vs. Dadi Early Childhood Education | Li Kang vs. Orient Semiconductor Electronics | Li Kang vs. Taiwan Semiconductor Co |
| Dynamic Medical vs. Elan Microelectronics Corp | Dynamic Medical vs. Elite Material Co | Dynamic Medical vs. Goldsun Building Materials | Dynamic Medical vs. Insyde Software |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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