Correlation Between Kang Yong and Eastern Commercial
Can any of the company-specific risk be diversified away by investing in both Kang Yong and Eastern Commercial 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 Kang Yong and Eastern Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kang Yong Electric and Eastern Commercial Leasing, you can compare the effects of market volatilities on Kang Yong and Eastern Commercial 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 Kang Yong with a short position of Eastern Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kang Yong and Eastern Commercial.
Diversification Opportunities for Kang Yong and Eastern Commercial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kang and Eastern is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kang Yong Electric and Eastern Commercial Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Commercial and Kang Yong 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 Kang Yong Electric are associated (or correlated) with Eastern Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Commercial has no effect on the direction of Kang Yong i.e., Kang Yong and Eastern Commercial go up and down completely randomly.
Pair Corralation between Kang Yong and Eastern Commercial
Assuming the 90 days trading horizon Kang Yong Electric is expected to generate 1.0 times more return on investment than Eastern Commercial. However, Kang Yong Electric is 1.0 times less risky than Eastern Commercial. It trades about 0.06 of its potential returns per unit of risk. Eastern Commercial Leasing is currently generating about 0.05 per unit of risk. If you would invest 26,464 in Kang Yong Electric on September 1, 2024 and sell it today you would earn a total of 2,236 from holding Kang Yong Electric or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
Kang Yong Electric vs. Eastern Commercial Leasing
Performance |
| Timeline |
| Kang Yong Electric |
| Eastern Commercial |
Kang Yong and Eastern Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kang Yong and Eastern Commercial
The main advantage of trading using opposite Kang Yong and Eastern Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kang Yong position performs unexpectedly, Eastern Commercial 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 Eastern Commercial will offset losses from the drop in Eastern Commercial's long position.| Kang Yong vs. Hwa Fong Rubber | Kang Yong vs. Hana Microelectronics Public | Kang Yong vs. KGI Securities Public | Kang Yong vs. Haad Thip Public |
| Eastern Commercial vs. Chai Watana Tannery | Eastern Commercial vs. EMC Public | Eastern Commercial vs. Asia Plus Group | Eastern Commercial vs. Globlex Holding Management |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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