Correlation Between K One and Hengyuan Refining

Can any of the company-specific risk be diversified away by investing in both K One and Hengyuan Refining 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 Hengyuan Refining 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 Hengyuan Refining, you can compare the effects of market volatilities on K One and Hengyuan Refining 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 Hengyuan Refining. Check out your portfolio center. Please also check ongoing floating volatility patterns of K One and Hengyuan Refining.

Diversification Opportunities for K One and Hengyuan Refining

0.93

Correlation Coefficient

K One  Hengyuan Refining

Almost no diversification

The 3 months correlation between 0111 and Hengyuan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding K One Technology Bhd and Hengyuan Refining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengyuan Refining 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 Hengyuan Refining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengyuan Refining has no effect on the direction of K One i.e., K One and Hengyuan Refining go up and down completely randomly.

Pair Corralation between K One and Hengyuan Refining

Assuming the 90 days trading horizon K One Technology Bhd is expected to under-perform the Hengyuan Refining. In addition to that, K One is 2.43 times more volatile than Hengyuan Refining. It trades about -0.1 of its total potential returns per unit of risk. Hengyuan Refining is currently generating about -0.18 per unit of volatility. If you would invest  211.00  in Hengyuan Refining on December 29, 2024 and sell it today you would lose (37.00) from holding Hengyuan Refining or give up 17.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

K One Technology Bhd  vs.  Hengyuan Refining

K One Technology

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Hengyuan Refining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hengyuan Refining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with K One and Hengyuan Refining

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

The idea behind K One Technology Bhd and Hengyuan Refining 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.