Correlation Between Delpha Construction and Kung Long
Can any of the company-specific risk be diversified away by investing in both Delpha Construction and Kung Long 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 Delpha Construction and Kung Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delpha Construction Co and Kung Long Batteries, you can compare the effects of market volatilities on Delpha Construction and Kung Long 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 Delpha Construction with a short position of Kung Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delpha Construction and Kung Long.
Diversification Opportunities for Delpha Construction and Kung Long
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Delpha and Kung is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Delpha Construction Co and Kung Long Batteries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kung Long Batteries and Delpha 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 Delpha Construction Co are associated (or correlated) with Kung Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kung Long Batteries has no effect on the direction of Delpha Construction i.e., Delpha Construction and Kung Long go up and down completely randomly.
Pair Corralation between Delpha Construction and Kung Long
Assuming the 90 days trading horizon Delpha Construction Co is expected to under-perform the Kung Long. In addition to that, Delpha Construction is 1.54 times more volatile than Kung Long Batteries. It trades about -0.2 of its total potential returns per unit of risk. Kung Long Batteries is currently generating about -0.26 per unit of volatility. If you would invest 16,100 in Kung Long Batteries on October 5, 2024 and sell it today you would lose (700.00) from holding Kung Long Batteries or give up 4.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Delpha Construction Co vs. Kung Long Batteries
Performance |
Timeline |
Delpha Construction |
Kung Long Batteries |
Delpha Construction and Kung Long Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Delpha Construction and Kung Long
The main advantage of trading using opposite Delpha Construction and Kung Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delpha Construction position performs unexpectedly, Kung Long 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 Long will offset losses from the drop in Kung Long's long position.Delpha Construction vs. BES Engineering Co | Delpha Construction vs. Kindom Construction Corp | Delpha Construction vs. Hung Sheng Construction | Delpha Construction vs. Cathay Real Estate |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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