Correlation Between Khgears International and Ta Liang

Can any of the company-specific risk be diversified away by investing in both Khgears International and Ta Liang 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 Khgears International and Ta Liang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Khgears International Limited and Ta Liang Technology, you can compare the effects of market volatilities on Khgears International and Ta Liang 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 Khgears International with a short position of Ta Liang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khgears International and Ta Liang.

Diversification Opportunities for Khgears International and Ta Liang

-0.53

Correlation Coefficient

Khgears International  Ta Liang

Excellent diversification

The 3 months correlation between Khgears and 3167 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Khgears International Limited and Ta Liang Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Liang Technology and Khgears International 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 Khgears International Limited are associated (or correlated) with Ta Liang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Liang Technology has no effect on the direction of Khgears International i.e., Khgears International and Ta Liang go up and down completely randomly.

Pair Corralation between Khgears International and Ta Liang

Assuming the 90 days trading horizon Khgears International Limited is expected to generate 1.75 times more return on investment than Ta Liang. However, Khgears International is 1.75 times more volatile than Ta Liang Technology. It trades about 0.38 of its potential returns per unit of risk. Ta Liang Technology is currently generating about -0.29 per unit of risk. If you would invest  17,900  in Khgears International Limited on September 23, 2024 and sell it today you would earn a total of  7,300  from holding Khgears International Limited or generate 40.78% return on investment over 90 days.

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

Khgears International Limited  vs.  Ta Liang Technology

Khgears International

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khgears International Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Khgears International showed solid returns over the last few months and may actually be approaching a breakup point.

Ta Liang Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ta Liang Technology 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 Khgears International and Ta Liang

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

The idea behind Khgears International Limited and Ta Liang Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.