Correlation Between Kung Long and Hiwin Technologies

Can any of the company-specific risk be diversified away by investing in both Kung Long and Hiwin Technologies 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 Kung Long and Hiwin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kung Long Batteries and Hiwin Technologies Corp, you can compare the effects of market volatilities on Kung Long and Hiwin Technologies 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 Kung Long with a short position of Hiwin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kung Long and Hiwin Technologies.

Diversification Opportunities for Kung Long and Hiwin Technologies

0.04

Correlation Coefficient

Kung Long  Hiwin Technologies

Significant diversification

The 3 months correlation between Kung and Hiwin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kung Long Batteries and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies Corp and Kung Long 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 Kung Long Batteries are associated (or correlated) with Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of Kung Long i.e., Kung Long and Hiwin Technologies go up and down completely randomly.

Pair Corralation between Kung Long and Hiwin Technologies

Assuming the 90 days trading horizon Kung Long is expected to generate 8.48 times less return on investment than Hiwin Technologies. But when comparing it to its historical volatility, Kung Long Batteries is 1.66 times less risky than Hiwin Technologies. It trades about 0.03 of its potential returns per unit of risk. Hiwin Technologies Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  20,250  in Hiwin Technologies Corp on September 16, 2024 and sell it today you would earn a total of  4,550  from holding Hiwin Technologies Corp or generate 22.47% return on investment over 90 days.

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

Kung Long Batteries  vs.  Hiwin Technologies Corp

Kung Long Batteries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kung Long Batteries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kung Long is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hiwin Technologies Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Technologies Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kung Long and Hiwin Technologies

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

The idea behind Kung Long Batteries and Hiwin Technologies Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.