Correlation Between Min Aik and Kaulin Mfg

Can any of the company-specific risk be diversified away by investing in both Min Aik and Kaulin Mfg 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 Min Aik and Kaulin Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Min Aik Technology and Kaulin Mfg, you can compare the effects of market volatilities on Min Aik and Kaulin Mfg 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 Min Aik with a short position of Kaulin Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and Kaulin Mfg.

Diversification Opportunities for Min Aik and Kaulin Mfg

-0.45

Correlation Coefficient

Min Aik  Kaulin Mfg

Very good diversification

The 3 months correlation between Min and Kaulin is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Kaulin Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaulin Mfg and Min Aik 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 Min Aik Technology are associated (or correlated) with Kaulin Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaulin Mfg has no effect on the direction of Min Aik i.e., Min Aik and Kaulin Mfg go up and down completely randomly.

Pair Corralation between Min Aik and Kaulin Mfg

Assuming the 90 days trading horizon Min Aik Technology is expected to under-perform the Kaulin Mfg. But the stock apears to be less risky and, when comparing its historical volatility, Min Aik Technology is 1.29 times less risky than Kaulin Mfg. The stock trades about -0.05 of its potential returns per unit of risk. The Kaulin Mfg is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,410  in Kaulin Mfg on September 14, 2024 and sell it today you would earn a total of  30.00  from holding Kaulin Mfg or generate 2.13% return on investment over 90 days.

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

Min Aik Technology  vs.  Kaulin Mfg

Min Aik Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Min Aik Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Kaulin Mfg

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaulin Mfg are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kaulin Mfg 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 Min Aik and Kaulin Mfg

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

The idea behind Min Aik Technology and Kaulin Mfg 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.