Correlation Between Est Global and Kwong Fong

Can any of the company-specific risk be diversified away by investing in both Est Global 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 Est Global and Kwong Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Est Global Apparel and Kwong Fong Industries, you can compare the effects of market volatilities on Est Global 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 Est Global with a short position of Kwong Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Est Global and Kwong Fong.

Diversification Opportunities for Est Global and Kwong Fong

0.11

Correlation Coefficient

Est Global  Kwong Fong

Average diversification

The 3 months correlation between Est and Kwong is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Est Global Apparel 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 Est Global 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 Est Global Apparel 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 Est Global i.e., Est Global and Kwong Fong go up and down completely randomly.

Pair Corralation between Est Global and Kwong Fong

Assuming the 90 days trading horizon Est Global Apparel is expected to generate 1.47 times more return on investment than Kwong Fong. However, Est Global is 1.47 times more volatile than Kwong Fong Industries. It trades about 0.05 of its potential returns per unit of risk. Kwong Fong Industries is currently generating about 0.05 per unit of risk. If you would invest  1,750  in Est Global Apparel on September 14, 2024 and sell it today you would earn a total of  95.00  from holding Est Global Apparel or generate 5.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Est Global Apparel  vs.  Kwong Fong Industries

Est Global Apparel

Risk-Adjusted Performance

3 of 100

Insignificant

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

Kwong Fong Industries

Risk-Adjusted Performance

0 of 100

Insignificant

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 fairly stable basic indicators, Kwong Fong is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Est Global and Kwong Fong

The main advantage of trading using opposite Est Global and Kwong Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Est Global 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 Est Global Apparel 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.