Correlation Between BES Engineering and Kung Sing

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

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

Diversification Opportunities for BES Engineering and Kung Sing

0.54

Correlation Coefficient

BES Engineering  Kung Sing

Very weak diversification

The 3 months correlation between BES and Kung is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Kung Sing Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kung Sing Engineering and BES Engineering 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 BES Engineering Co are associated (or correlated) with Kung Sing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kung Sing Engineering has no effect on the direction of BES Engineering i.e., BES Engineering and Kung Sing go up and down completely randomly.

Pair Corralation between BES Engineering and Kung Sing

Assuming the 90 days trading horizon BES Engineering is expected to generate 4.37 times less return on investment than Kung Sing. But when comparing it to its historical volatility, BES Engineering Co is 1.09 times less risky than Kung Sing. It trades about 0.05 of its potential returns per unit of risk. Kung Sing Engineering is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Kung Sing Engineering on December 28, 2024 and sell it today you would earn a total of  270.00  from holding Kung Sing Engineering or generate 25.47% return on investment over 90 days.

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

BES Engineering Co  vs.  Kung Sing Engineering

BES Engineering

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BES Engineering Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BES Engineering is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kung Sing Engineering

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kung Sing Engineering are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kung Sing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BES Engineering and Kung Sing

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

The idea behind BES Engineering Co and Kung Sing Engineering 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.