Correlation Between K One and DC HEALTHCARE

Can any of the company-specific risk be diversified away by investing in both K One and DC HEALTHCARE 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 K One and DC HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between K One Technology Bhd and DC HEALTHCARE HOLDINGS, you can compare the effects of market volatilities on K One and DC HEALTHCARE 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 K One with a short position of DC HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of K One and DC HEALTHCARE.

Diversification Opportunities for K One and DC HEALTHCARE

0.13

Correlation Coefficient

K One  DC HEALTHCARE

Average diversification

The 3 months correlation between 0111 and 0283 is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding K One Technology Bhd and DC HEALTHCARE HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC HEALTHCARE HOLDINGS and K One 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 K One Technology Bhd are associated (or correlated) with DC HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC HEALTHCARE HOLDINGS has no effect on the direction of K One i.e., K One and DC HEALTHCARE go up and down completely randomly.

Pair Corralation between K One and DC HEALTHCARE

Assuming the 90 days trading horizon K One Technology Bhd is expected to generate 1.43 times more return on investment than DC HEALTHCARE. However, K One is 1.43 times more volatile than DC HEALTHCARE HOLDINGS. It trades about 0.0 of its potential returns per unit of risk. DC HEALTHCARE HOLDINGS is currently generating about -0.04 per unit of risk. If you would invest  18.00  in K One Technology Bhd on September 5, 2024 and sell it today you would lose (1.00) from holding K One Technology Bhd or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

K One Technology Bhd  vs.  DC HEALTHCARE HOLDINGS

K One Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K One Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, K One is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

DC HEALTHCARE HOLDINGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DC HEALTHCARE HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with K One and DC HEALTHCARE

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

The idea behind K One Technology Bhd and DC HEALTHCARE HOLDINGS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.