Correlation Between Concord Securities and Li Kang

Can any of the company-specific risk be diversified away by investing in both Concord Securities and Li Kang 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 Concord Securities and Li Kang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Concord Securities Co and Li Kang Biomedical, you can compare the effects of market volatilities on Concord Securities and Li Kang 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 Concord Securities with a short position of Li Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Securities and Li Kang.

Diversification Opportunities for Concord Securities and Li Kang

0.6

Correlation Coefficient

Concord Securities  Li Kang

Poor diversification

The 3 months correlation between Concord and 6242 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Concord Securities Co and Li Kang Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Kang Biomedical and Concord Securities 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 Concord Securities Co are associated (or correlated) with Li Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Kang Biomedical has no effect on the direction of Concord Securities i.e., Concord Securities and Li Kang go up and down completely randomly.

Pair Corralation between Concord Securities and Li Kang

Assuming the 90 days trading horizon Concord Securities Co is expected to under-perform the Li Kang. But the stock apears to be less risky and, when comparing its historical volatility, Concord Securities Co is 1.86 times less risky than Li Kang. The stock trades about -0.37 of its potential returns per unit of risk. The Li Kang Biomedical is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  4,350  in Li Kang Biomedical on September 23, 2024 and sell it today you would lose (110.00) from holding Li Kang Biomedical or give up 2.53% of portfolio value over 90 days.

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

Concord Securities Co  vs.  Li Kang Biomedical

Concord Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Li Kang Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li Kang Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Li Kang 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 Concord Securities and Li Kang

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

The idea behind Concord Securities Co and Li Kang Biomedical 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.