Correlation Between Kindom Construction and Kuo Yang

Can any of the company-specific risk be diversified away by investing in both Kindom Construction and Kuo Yang 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 Kindom Construction and Kuo Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kindom Construction Corp and Kuo Yang Construction, you can compare the effects of market volatilities on Kindom Construction and Kuo Yang 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 Kindom Construction with a short position of Kuo Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindom Construction and Kuo Yang.

Diversification Opportunities for Kindom Construction and Kuo Yang

0.2

Correlation Coefficient

Kindom Construction  Kuo Yang

Modest diversification

The 3 months correlation between Kindom and Kuo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and Kuo Yang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuo Yang Construction and Kindom Construction 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 Kindom Construction Corp are associated (or correlated) with Kuo Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuo Yang Construction has no effect on the direction of Kindom Construction i.e., Kindom Construction and Kuo Yang go up and down completely randomly.

Pair Corralation between Kindom Construction and Kuo Yang

Assuming the 90 days trading horizon Kindom Construction Corp is expected to under-perform the Kuo Yang. In addition to that, Kindom Construction is 1.56 times more volatile than Kuo Yang Construction. It trades about -0.01 of its total potential returns per unit of risk. Kuo Yang Construction is currently generating about 0.03 per unit of volatility. If you would invest  2,120  in Kuo Yang Construction on September 19, 2024 and sell it today you would earn a total of  15.00  from holding Kuo Yang Construction or generate 0.71% return on investment over 90 days.

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

Kindom Construction Corp  vs.  Kuo Yang Construction

Kindom Construction Corp

Risk-Adjusted Performance

0 of 100

Weak

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

Kuo Yang Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuo Yang Construction 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Kindom Construction and Kuo Yang

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

The idea behind Kindom Construction Corp and Kuo Yang Construction 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.