Correlation Between Li Kang and Great Computer
Can any of the company-specific risk be diversified away by investing in both Li Kang and Great Computer 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 Great Computer 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 Great Computer, you can compare the effects of market volatilities on Li Kang and Great Computer 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 Great Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Kang and Great Computer.
Diversification Opportunities for Li Kang and Great Computer
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 6242 and Great is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Li Kang Biomedical and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer 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 Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of Li Kang i.e., Li Kang and Great Computer go up and down completely randomly.
Pair Corralation between Li Kang and Great Computer
Assuming the 90 days trading horizon Li Kang is expected to generate 91.44 times less return on investment than Great Computer. But when comparing it to its historical volatility, Li Kang Biomedical is 26.36 times less risky than Great Computer. It trades about 0.01 of its potential returns per unit of risk. Great Computer is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,215 in Great Computer on October 12, 2024 and sell it today you would earn a total of 795.00 from holding Great Computer or generate 65.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Li Kang Biomedical vs. Great Computer
Performance |
| Timeline |
| Li Kang Biomedical |
| Great Computer |
Li Kang and Great Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Kang and Great Computer
The main advantage of trading using opposite Li Kang and Great Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Kang position performs unexpectedly, Great Computer 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 Great Computer will offset losses from the drop in Great Computer's long position.| Li Kang vs. Sunmax Biotechnology Co | Li Kang vs. Posiflex Technology | Li Kang vs. GeneReach Biotechnology | Li Kang vs. Asmedia Technology |
| Great Computer vs. Sea Sonic Electronics | Great Computer vs. International Games System | Great Computer vs. WT Microelectronics Co | Great Computer vs. Bright Led Electronics |
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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