Correlation Between K Way and Fortune Information

Can any of the company-specific risk be diversified away by investing in both K Way and Fortune Information 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 K Way and Fortune Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between K Way Information and Fortune Information Systems, you can compare the effects of market volatilities on K Way and Fortune Information 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 K Way with a short position of Fortune Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of K Way and Fortune Information.

Diversification Opportunities for K Way and Fortune Information

0.91

Correlation Coefficient

K Way  Fortune Information

Almost no diversification

The 3 months correlation between 5201 and Fortune is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding K Way Information and Fortune Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Information and K Way 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 K Way Information are associated (or correlated) with Fortune Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Information has no effect on the direction of K Way i.e., K Way and Fortune Information go up and down completely randomly.

Pair Corralation between K Way and Fortune Information

Assuming the 90 days trading horizon K Way is expected to generate 2.05 times less return on investment than Fortune Information. But when comparing it to its historical volatility, K Way Information is 1.84 times less risky than Fortune Information. It trades about 0.23 of its potential returns per unit of risk. Fortune Information Systems is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,730  in Fortune Information Systems on December 23, 2024 and sell it today you would earn a total of  2,170  from holding Fortune Information Systems or generate 79.49% return on investment over 90 days.

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

K Way Information  vs.  Fortune Information Systems

K Way Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in K Way Information are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, K Way showed solid returns over the last few months and may actually be approaching a breakup point.

Fortune Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Information Systems are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fortune Information showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with K Way and Fortune Information

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

The idea behind K Way Information and Fortune Information Systems 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.