Correlation Between K One and Ho Hup

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

Diversification Opportunities for K One and Ho Hup

-0.33

Correlation Coefficient

K One  Ho Hup

Very good diversification

The 3 months correlation between 0111 and 5169 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding K One Technology Bhd and Ho Hup Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Hup Construction 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 Ho Hup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Hup Construction has no effect on the direction of K One i.e., K One and Ho Hup go up and down completely randomly.

Pair Corralation between K One and Ho Hup

Assuming the 90 days trading horizon K One Technology Bhd is expected to under-perform the Ho Hup. But the stock apears to be less risky and, when comparing its historical volatility, K One Technology Bhd is 1.04 times less risky than Ho Hup. The stock trades about -0.04 of its potential returns per unit of risk. The Ho Hup Construction is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Ho Hup Construction on September 4, 2024 and sell it today you would earn a total of  1.00  from holding Ho Hup Construction or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

K One Technology Bhd  vs.  Ho Hup Construction

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 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.

Ho Hup Construction

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ho Hup Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Ho Hup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with K One and Ho Hup

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

The idea behind K One Technology Bhd and Ho Hup Construction 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.