Correlation Between Ability Enterprise and Kinko Optical

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

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

Diversification Opportunities for Ability Enterprise and Kinko Optical

0.36

Correlation Coefficient

Ability Enterprise  Kinko Optical

Weak diversification

The 3 months correlation between Ability and Kinko is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ability Enterprise Co and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical and Ability 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 Ability Enterprise Co are associated (or correlated) with Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Ability Enterprise i.e., Ability Enterprise and Kinko Optical go up and down completely randomly.

Pair Corralation between Ability Enterprise and Kinko Optical

Assuming the 90 days trading horizon Ability Enterprise Co is expected to under-perform the Kinko Optical. In addition to that, Ability Enterprise is 1.02 times more volatile than Kinko Optical Co. It trades about -0.12 of its total potential returns per unit of risk. Kinko Optical Co is currently generating about 0.07 per unit of volatility. If you would invest  2,860  in Kinko Optical Co on December 30, 2024 and sell it today you would earn a total of  235.00  from holding Kinko Optical Co or generate 8.22% return on investment over 90 days.

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

Ability Enterprise Co  vs.  Kinko Optical Co

Ability Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ability Enterprise Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Kinko Optical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinko Optical Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kinko Optical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ability Enterprise and Kinko Optical

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

The idea behind Ability Enterprise Co and Kinko Optical Co 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.