Correlation Between Victory New and Kingcan Holdings

Can any of the company-specific risk be diversified away by investing in both Victory New and Kingcan Holdings 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 Victory New and Kingcan Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victory New Materials and Kingcan Holdings, you can compare the effects of market volatilities on Victory New and Kingcan Holdings 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 Victory New with a short position of Kingcan Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Kingcan Holdings.

Diversification Opportunities for Victory New and Kingcan Holdings

-0.01

Correlation Coefficient

Victory New  Kingcan Holdings

Good diversification

The 3 months correlation between Victory and Kingcan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Kingcan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingcan Holdings and Victory New 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 Victory New Materials are associated (or correlated) with Kingcan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingcan Holdings has no effect on the direction of Victory New i.e., Victory New and Kingcan Holdings go up and down completely randomly.

Pair Corralation between Victory New and Kingcan Holdings

Assuming the 90 days trading horizon Victory New Materials is expected to generate 1.49 times more return on investment than Kingcan Holdings. However, Victory New is 1.49 times more volatile than Kingcan Holdings. It trades about -0.01 of its potential returns per unit of risk. Kingcan Holdings is currently generating about -0.02 per unit of risk. If you would invest  1,040  in Victory New Materials on December 5, 2024 and sell it today you would lose (129.00) from holding Victory New Materials or give up 12.4% of portfolio value over 90 days.

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

Victory New Materials  vs.  Kingcan Holdings

Victory New Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Kingcan Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingcan Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kingcan Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Victory New and Kingcan Holdings

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

The idea behind Victory New Materials and Kingcan 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .