Correlation Between Kindom Construction and Chi Hua

Can any of the company-specific risk be diversified away by investing in both Kindom Construction and Chi Hua 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 Kindom Construction and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kindom Construction Corp and Chi Hua Fitness, you can compare the effects of market volatilities on Kindom Construction and Chi Hua 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 Kindom Construction with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindom Construction and Chi Hua.

Diversification Opportunities for Kindom Construction and Chi Hua

-0.48

Correlation Coefficient

Kindom Construction  Chi Hua

Very good diversification

The 3 months correlation between Kindom and Chi is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kindom Construction Corp and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Kindom Construction 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 Kindom Construction Corp are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Kindom Construction i.e., Kindom Construction and Chi Hua go up and down completely randomly.

Pair Corralation between Kindom Construction and Chi Hua

Assuming the 90 days trading horizon Kindom Construction Corp is expected to generate 1.5 times more return on investment than Chi Hua. However, Kindom Construction is 1.5 times more volatile than Chi Hua Fitness. It trades about 0.05 of its potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.08 per unit of risk. If you would invest  5,170  in Kindom Construction Corp on September 15, 2024 and sell it today you would earn a total of  260.00  from holding Kindom Construction Corp or generate 5.03% return on investment over 90 days.

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

Kindom Construction Corp  vs.  Chi Hua Fitness

Kindom Construction Corp

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kindom Construction Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kindom Construction may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Chi Hua Fitness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chi Hua Fitness 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 Kindom Construction and Chi Hua

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

The idea behind Kindom Construction Corp and Chi Hua Fitness 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.