Correlation Between Li Kang and Energenesis Biomedical

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

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

Diversification Opportunities for Li Kang and Energenesis Biomedical

0.32

Correlation Coefficient

Li Kang  Energenesis Biomedical

Weak diversification

The 3 months correlation between 6242 and Energenesis is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Li Kang Biomedical and Energenesis Biomedical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energenesis Biomedical and Li Kang 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 Li Kang Biomedical are associated (or correlated) with Energenesis Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energenesis Biomedical has no effect on the direction of Li Kang i.e., Li Kang and Energenesis Biomedical go up and down completely randomly.

Pair Corralation between Li Kang and Energenesis Biomedical

Assuming the 90 days trading horizon Li Kang Biomedical is expected to generate 0.5 times more return on investment than Energenesis Biomedical. However, Li Kang Biomedical is 2.01 times less risky than Energenesis Biomedical. It trades about -0.06 of its potential returns per unit of risk. Energenesis Biomedical Co is currently generating about -0.31 per unit of risk. If you would invest  4,300  in Li Kang Biomedical on October 5, 2024 and sell it today you would lose (65.00) from holding Li Kang Biomedical or give up 1.51% of portfolio value over 90 days.

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

Li Kang Biomedical  vs.  Energenesis Biomedical Co

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.

Energenesis Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Li Kang Biomedical and Energenesis Biomedical Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.