Correlation Between Kinko Optical and Lian Hwa

Can any of the company-specific risk be diversified away by investing in both Kinko Optical and Lian Hwa 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 Kinko Optical and Lian Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinko Optical Co and Lian Hwa Foods, you can compare the effects of market volatilities on Kinko Optical and Lian Hwa 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 Kinko Optical with a short position of Lian Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinko Optical and Lian Hwa.

Diversification Opportunities for Kinko Optical and Lian Hwa

0.42

Correlation Coefficient

Kinko Optical  Lian Hwa

Very weak diversification

The 3 months correlation between Kinko and Lian is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kinko Optical Co and Lian Hwa Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lian Hwa Foods and Kinko Optical 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 Kinko Optical Co are associated (or correlated) with Lian Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lian Hwa Foods has no effect on the direction of Kinko Optical i.e., Kinko Optical and Lian Hwa go up and down completely randomly.

Pair Corralation between Kinko Optical and Lian Hwa

Assuming the 90 days trading horizon Kinko Optical Co is expected to generate 0.98 times more return on investment than Lian Hwa. However, Kinko Optical Co is 1.02 times less risky than Lian Hwa. It trades about 0.06 of its potential returns per unit of risk. Lian Hwa Foods is currently generating about 0.02 per unit of risk. If you would invest  2,780  in Kinko Optical Co on December 21, 2024 and sell it today you would earn a total of  235.00  from holding Kinko Optical Co or generate 8.45% return on investment over 90 days.

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

Kinko Optical Co  vs.  Lian Hwa Foods

Kinko Optical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinko Optical Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kinko Optical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lian Hwa Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lian Hwa Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Lian Hwa 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 Kinko Optical and Lian Hwa

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

The idea behind Kinko Optical Co and Lian Hwa Foods 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.