Correlation Between Super Dragon and Kingcan Holdings

Can any of the company-specific risk be diversified away by investing in both Super Dragon and Kingcan Holdings 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 Super Dragon and Kingcan Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Super Dragon Technology and Kingcan Holdings, you can compare the effects of market volatilities on Super Dragon and Kingcan Holdings 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 Super Dragon with a short position of Kingcan Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Dragon and Kingcan Holdings.

Diversification Opportunities for Super Dragon and Kingcan Holdings

0.89

Correlation Coefficient

Super Dragon  Kingcan Holdings

Very poor diversification

The 3 months correlation between Super and Kingcan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Super Dragon Technology and Kingcan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingcan Holdings and Super Dragon 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 Super Dragon Technology are associated (or correlated) with Kingcan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingcan Holdings has no effect on the direction of Super Dragon i.e., Super Dragon and Kingcan Holdings go up and down completely randomly.

Pair Corralation between Super Dragon and Kingcan Holdings

Assuming the 90 days trading horizon Super Dragon Technology is expected to under-perform the Kingcan Holdings. In addition to that, Super Dragon is 1.45 times more volatile than Kingcan Holdings. It trades about -0.2 of its total potential returns per unit of risk. Kingcan Holdings is currently generating about -0.13 per unit of volatility. If you would invest  1,405  in Kingcan Holdings on September 18, 2024 and sell it today you would lose (155.00) from holding Kingcan Holdings or give up 11.03% of portfolio value over 90 days.

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

Super Dragon Technology  vs.  Kingcan Holdings

Super Dragon Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Dragon Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Kingcan Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingcan Holdings 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.

Pair Trading with Super Dragon and Kingcan Holdings

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

The idea behind Super Dragon Technology and Kingcan Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.