Correlation Between Do Fluoride and Kingclean Electric

Can any of the company-specific risk be diversified away by investing in both Do Fluoride and Kingclean Electric 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 Do Fluoride and Kingclean Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Do Fluoride Chemicals Co and Kingclean Electric Co, you can compare the effects of market volatilities on Do Fluoride and Kingclean Electric 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 Do Fluoride with a short position of Kingclean Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Do Fluoride and Kingclean Electric.

Diversification Opportunities for Do Fluoride and Kingclean Electric

0.22

Correlation Coefficient

Do Fluoride  Kingclean Electric

Modest diversification

The 3 months correlation between 002407 and Kingclean is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Do Fluoride Chemicals Co and Kingclean Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingclean Electric and Do Fluoride 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 Do Fluoride Chemicals Co are associated (or correlated) with Kingclean Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingclean Electric has no effect on the direction of Do Fluoride i.e., Do Fluoride and Kingclean Electric go up and down completely randomly.

Pair Corralation between Do Fluoride and Kingclean Electric

Assuming the 90 days trading horizon Do Fluoride Chemicals Co is expected to under-perform the Kingclean Electric. In addition to that, Do Fluoride is 1.18 times more volatile than Kingclean Electric Co. It trades about -0.05 of its total potential returns per unit of risk. Kingclean Electric Co is currently generating about -0.01 per unit of volatility. If you would invest  2,885  in Kingclean Electric Co on October 27, 2024 and sell it today you would lose (599.00) from holding Kingclean Electric Co or give up 20.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Do Fluoride Chemicals Co  vs.  Kingclean Electric Co

Do Fluoride Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Do Fluoride Chemicals Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Kingclean Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingclean Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kingclean Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Do Fluoride and Kingclean Electric

The main advantage of trading using opposite Do Fluoride and Kingclean Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Do Fluoride position performs unexpectedly, Kingclean Electric 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 Kingclean Electric will offset losses from the drop in Kingclean Electric's long position.

The idea behind Do Fluoride Chemicals Co and Kingclean Electric Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.