Correlation Between ECOVE Environment and Kung Long
Can any of the company-specific risk be diversified away by investing in both ECOVE Environment and Kung Long 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 ECOVE Environment and Kung Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECOVE Environment Corp and Kung Long Batteries, you can compare the effects of market volatilities on ECOVE Environment and Kung Long 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 ECOVE Environment with a short position of Kung Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECOVE Environment and Kung Long.
Diversification Opportunities for ECOVE Environment and Kung Long
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ECOVE and Kung is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ECOVE Environment Corp and Kung Long Batteries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kung Long Batteries and ECOVE Environment 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 ECOVE Environment Corp are associated (or correlated) with Kung Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kung Long Batteries has no effect on the direction of ECOVE Environment i.e., ECOVE Environment and Kung Long go up and down completely randomly.
Pair Corralation between ECOVE Environment and Kung Long
Assuming the 90 days trading horizon ECOVE Environment Corp is expected to generate 0.63 times more return on investment than Kung Long. However, ECOVE Environment Corp is 1.59 times less risky than Kung Long. It trades about 0.36 of its potential returns per unit of risk. Kung Long Batteries is currently generating about 0.2 per unit of risk. If you would invest 28,600 in ECOVE Environment Corp on November 18, 2024 and sell it today you would earn a total of 550.00 from holding ECOVE Environment Corp or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECOVE Environment Corp vs. Kung Long Batteries
Performance |
| Timeline |
| ECOVE Environment Corp |
| Kung Long Batteries |
ECOVE Environment and Kung Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECOVE Environment and Kung Long
The main advantage of trading using opposite ECOVE Environment and Kung Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECOVE Environment position performs unexpectedly, Kung Long 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 Kung Long will offset losses from the drop in Kung Long's long position.| ECOVE Environment vs. Cleanaway Co | ECOVE Environment vs. Taiwan Secom Co | ECOVE Environment vs. Sunny Friend Environmental | ECOVE Environment vs. TTET Union Corp |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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