Correlation Between RiTdisplay Corp and Kwong Fong

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Can any of the company-specific risk be diversified away by investing in both RiTdisplay Corp and Kwong Fong 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 RiTdisplay Corp and Kwong Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RiTdisplay Corp and Kwong Fong Industries, you can compare the effects of market volatilities on RiTdisplay Corp and Kwong Fong 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 RiTdisplay Corp with a short position of Kwong Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiTdisplay Corp and Kwong Fong.

Diversification Opportunities for RiTdisplay Corp and Kwong Fong

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between RiTdisplay and Kwong is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding RiTdisplay Corp and Kwong Fong Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwong Fong Industries and RiTdisplay Corp 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 RiTdisplay Corp are associated (or correlated) with Kwong Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwong Fong Industries has no effect on the direction of RiTdisplay Corp i.e., RiTdisplay Corp and Kwong Fong go up and down completely randomly.

Pair Corralation between RiTdisplay Corp and Kwong Fong

Assuming the 90 days trading horizon RiTdisplay Corp is expected to generate 2.29 times more return on investment than Kwong Fong. However, RiTdisplay Corp is 2.29 times more volatile than Kwong Fong Industries. It trades about -0.03 of its potential returns per unit of risk. Kwong Fong Industries is currently generating about -0.08 per unit of risk. If you would invest  4,695  in RiTdisplay Corp on October 11, 2024 and sell it today you would lose (415.00) from holding RiTdisplay Corp or give up 8.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

RiTdisplay Corp  vs.  Kwong Fong Industries

 Performance 
       Timeline  
RiTdisplay Corp 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kwong Fong Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

RiTdisplay Corp and Kwong Fong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with RiTdisplay Corp and Kwong Fong

The main advantage of trading using opposite RiTdisplay Corp and Kwong Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiTdisplay Corp position performs unexpectedly, Kwong Fong 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 Kwong Fong will offset losses from the drop in Kwong Fong's long position.
The idea behind RiTdisplay Corp and Kwong Fong Industries 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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