Correlation Between Lam Soon and KGI Securities
Can any of the company-specific risk be diversified away by investing in both Lam Soon and KGI Securities 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 Lam Soon and KGI Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Soon Public and KGI Securities Public, you can compare the effects of market volatilities on Lam Soon and KGI Securities 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 Lam Soon with a short position of KGI Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Soon and KGI Securities.
Diversification Opportunities for Lam Soon and KGI Securities
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lam and KGI is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lam Soon Public and KGI Securities Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGI Securities Public and Lam Soon 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 Lam Soon Public are associated (or correlated) with KGI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGI Securities Public has no effect on the direction of Lam Soon i.e., Lam Soon and KGI Securities go up and down completely randomly.
Pair Corralation between Lam Soon and KGI Securities
Assuming the 90 days trading horizon Lam Soon Public is expected to generate 56.22 times more return on investment than KGI Securities. However, Lam Soon is 56.22 times more volatile than KGI Securities Public. It trades about 0.04 of its potential returns per unit of risk. KGI Securities Public is currently generating about 0.0 per unit of risk. If you would invest 458.00 in Lam Soon Public on August 30, 2024 and sell it today you would earn a total of 42.00 from holding Lam Soon Public or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lam Soon Public vs. KGI Securities Public
Performance |
| Timeline |
| Lam Soon Public |
| KGI Securities Public |
Lam Soon and KGI Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Soon and KGI Securities
The main advantage of trading using opposite Lam Soon and KGI Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Soon position performs unexpectedly, KGI Securities 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 KGI Securities will offset losses from the drop in KGI Securities' long position.| Lam Soon vs. Haad Thip Public | Lam Soon vs. Hwa Fong Rubber | Lam Soon vs. GFPT Public | Lam Soon vs. KGI Securities Public |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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