Correlation Between Kindom Construction and Shining Building

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

Diversification Opportunities for Kindom Construction and Shining Building

0.72

Correlation Coefficient

Kindom Construction  Shining Building

Poor diversification

The 3 months correlation between Kindom and Shining is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and Shining Building Business in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shining Building Business 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 Shining Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shining Building Business has no effect on the direction of Kindom Construction i.e., Kindom Construction and Shining Building go up and down completely randomly.

Pair Corralation between Kindom Construction and Shining Building

Assuming the 90 days trading horizon Kindom Construction Corp is expected to generate 0.81 times more return on investment than Shining Building. However, Kindom Construction Corp is 1.23 times less risky than Shining Building. It trades about 0.07 of its potential returns per unit of risk. Shining Building Business is currently generating about -0.02 per unit of risk. If you would invest  4,730  in Kindom Construction Corp on October 9, 2024 and sell it today you would earn a total of  340.00  from holding Kindom Construction Corp or generate 7.19% return on investment over 90 days.

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

Kindom Construction Corp  vs.  Shining Building Business

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 February 2025.

Shining Building Business

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kindom Construction and Shining Building

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

The idea behind Kindom Construction Corp and Shining Building Business 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.