Correlation Between K One and Duopharma Biotech

Can any of the company-specific risk be diversified away by investing in both K One and Duopharma Biotech 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 K One and Duopharma Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between K One Technology Bhd and Duopharma Biotech Bhd, you can compare the effects of market volatilities on K One and Duopharma Biotech 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 K One with a short position of Duopharma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of K One and Duopharma Biotech.

Diversification Opportunities for K One and Duopharma Biotech

-0.16

Correlation Coefficient

K One  Duopharma Biotech

Good diversification

The 3 months correlation between 0111 and Duopharma is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding K One Technology Bhd and Duopharma Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duopharma Biotech Bhd and K One 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 K One Technology Bhd are associated (or correlated) with Duopharma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duopharma Biotech Bhd has no effect on the direction of K One i.e., K One and Duopharma Biotech go up and down completely randomly.

Pair Corralation between K One and Duopharma Biotech

Assuming the 90 days trading horizon K One Technology Bhd is expected to generate 2.66 times more return on investment than Duopharma Biotech. However, K One is 2.66 times more volatile than Duopharma Biotech Bhd. It trades about 0.06 of its potential returns per unit of risk. Duopharma Biotech Bhd is currently generating about 0.08 per unit of risk. If you would invest  17.00  in K One Technology Bhd on September 12, 2024 and sell it today you would earn a total of  2.00  from holding K One Technology Bhd or generate 11.76% return on investment over 90 days.

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

K One Technology Bhd  vs.  Duopharma Biotech Bhd

K One Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in K One Technology Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, K One disclosed solid returns over the last few months and may actually be approaching a breakup point.

Duopharma Biotech Bhd

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duopharma Biotech Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Duopharma Biotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with K One and Duopharma Biotech

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

The idea behind K One Technology Bhd and Duopharma Biotech Bhd 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.