Correlation Between KL Technology and Lion Forest
Can any of the company-specific risk be diversified away by investing in both KL Technology and Lion Forest 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 KL Technology and Lion Forest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KL Technology and Lion Forest Industries, you can compare the effects of market volatilities on KL Technology and Lion Forest 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 KL Technology with a short position of Lion Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of KL Technology and Lion Forest.
Diversification Opportunities for KL Technology and Lion Forest
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KLTE and Lion is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding KL Technology and Lion Forest Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Forest Industries and KL Technology 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 KL Technology are associated (or correlated) with Lion Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Forest Industries has no effect on the direction of KL Technology i.e., KL Technology and Lion Forest go up and down completely randomly.
Pair Corralation between KL Technology and Lion Forest
Assuming the 90 days trading horizon KL Technology is expected to generate 11.21 times less return on investment than Lion Forest. But when comparing it to its historical volatility, KL Technology is 2.29 times less risky than Lion Forest. It trades about 0.02 of its potential returns per unit of risk. Lion Forest Industries is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Lion Forest Industries on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Lion Forest Industries or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KL Technology vs. Lion Forest Industries
Performance |
| Timeline |
KL Technology and Lion Forest Volatility Contrast
Predicted Return Density |
| Returns |
KL Technology
Pair trading matchups for KL Technology
Lion Forest Industries
Pair trading matchups for Lion Forest
Pair Trading with KL Technology and Lion Forest
The main advantage of trading using opposite KL Technology and Lion Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KL Technology position performs unexpectedly, Lion Forest 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 Lion Forest will offset losses from the drop in Lion Forest's long position.| KL Technology vs. Radiant Globaltech Bhd | KL Technology vs. Supercomnet Technologies Bhd | KL Technology vs. Resintech Bhd | KL Technology vs. Dataprep Holdings Bhd |
| Lion Forest vs. Central Industrial Corp | Lion Forest vs. Alliance Financial Group | Lion Forest vs. Uchi Technologies Bhd | Lion Forest vs. Dataprep Holdings Bhd |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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