Correlation Between Kindom Construction and Farglory Land

Can any of the company-specific risk be diversified away by investing in both Kindom Construction and Farglory Land 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 Farglory Land 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 Farglory Land Development, you can compare the effects of market volatilities on Kindom Construction and Farglory Land 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 Farglory Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindom Construction and Farglory Land.

Diversification Opportunities for Kindom Construction and Farglory Land

-0.09

Correlation Coefficient

Kindom Construction  Farglory Land

Good diversification

The 3 months correlation between Kindom and Farglory is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and Farglory Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory Land Development 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 Farglory Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory Land Development has no effect on the direction of Kindom Construction i.e., Kindom Construction and Farglory Land go up and down completely randomly.

Pair Corralation between Kindom Construction and Farglory Land

Assuming the 90 days trading horizon Kindom Construction Corp is expected to under-perform the Farglory Land. But the stock apears to be less risky and, when comparing its historical volatility, Kindom Construction Corp is 1.41 times less risky than Farglory Land. The stock trades about -0.11 of its potential returns per unit of risk. The Farglory Land Development is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,740  in Farglory Land Development on September 20, 2024 and sell it today you would earn a total of  910.00  from holding Farglory Land Development or generate 13.5% return on investment over 90 days.

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

Kindom Construction Corp  vs.  Farglory Land Development

Kindom Construction Corp

Risk-Adjusted Performance

5 of 100

Modest

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

Farglory Land Development

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Farglory Land Development are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Farglory Land may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kindom Construction and Farglory Land

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

The idea behind Kindom Construction Corp and Farglory Land Development 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 CEOs Directory module to screen CEOs from public companies around the world.