Correlation Between Lealea Enterprise and Kwong Fong

Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and Kwong Fong 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 Lealea Enterprise and Kwong Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lealea Enterprise Co and Kwong Fong Industries, you can compare the effects of market volatilities on Lealea Enterprise and Kwong Fong 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 Lealea Enterprise with a short position of Kwong Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Kwong Fong.

Diversification Opportunities for Lealea Enterprise and Kwong Fong

0.44

Correlation Coefficient

Lealea Enterprise  Kwong Fong

Very weak diversification

The 3 months correlation between Lealea and Kwong is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and Kwong Fong Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwong Fong Industries and Lealea Enterprise 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 Lealea Enterprise Co are associated (or correlated) with Kwong Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwong Fong Industries has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and Kwong Fong go up and down completely randomly.

Pair Corralation between Lealea Enterprise and Kwong Fong

Assuming the 90 days trading horizon Lealea Enterprise Co is expected to under-perform the Kwong Fong. But the stock apears to be less risky and, when comparing its historical volatility, Lealea Enterprise Co is 1.29 times less risky than Kwong Fong. The stock trades about -0.03 of its potential returns per unit of risk. The Kwong Fong Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,030  in Kwong Fong Industries on October 11, 2024 and sell it today you would earn a total of  200.00  from holding Kwong Fong Industries or generate 19.42% return on investment over 90 days.

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

Lealea Enterprise Co  vs.  Kwong Fong Industries

Lealea Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lealea Enterprise Co 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.

Kwong Fong Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kwong Fong Industries 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.

Pair Trading with Lealea Enterprise and Kwong Fong

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

The idea behind Lealea Enterprise Co and Kwong Fong Industries 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.