Correlation Between Power Wind and K Way
Can any of the company-specific risk be diversified away by investing in both Power Wind and K Way 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 Power Wind and K Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Wind Health and K Way Information, you can compare the effects of market volatilities on Power Wind and K Way 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 Power Wind with a short position of K Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Wind and K Way.
Diversification Opportunities for Power Wind and K Way
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and 5201 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Power Wind Health and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and Power Wind 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 Power Wind Health are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of Power Wind i.e., Power Wind and K Way go up and down completely randomly.
Pair Corralation between Power Wind and K Way
Assuming the 90 days trading horizon Power Wind Health is expected to under-perform the K Way. But the stock apears to be less risky and, when comparing its historical volatility, Power Wind Health is 1.95 times less risky than K Way. The stock trades about -0.2 of its potential returns per unit of risk. The K Way Information is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,835 in K Way Information on October 13, 2024 and sell it today you would earn a total of 0.00 from holding K Way Information or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Power Wind Health vs. K Way Information
Performance |
Timeline |
Power Wind Health |
K Way Information |
Power Wind and K Way Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Power Wind and K Way
The main advantage of trading using opposite Power Wind and K Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Wind position performs unexpectedly, K Way 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 K Way will offset losses from the drop in K Way's long position.Power Wind vs. Sunny Friend Environmental | Power Wind vs. Cleanaway Co | Power Wind vs. Charoen Pokphand Enterprise | Power Wind vs. TTET Union Corp |
K Way vs. Johnson Health Tech | K Way vs. Power Wind Health | K Way vs. International Games System | K Way vs. CHC Healthcare Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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