Correlation Between KNH Enterprise and Nan Liu

Can any of the company-specific risk be diversified away by investing in both KNH Enterprise and Nan Liu 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 KNH Enterprise and Nan Liu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KNH Enterprise Co and Nan Liu Enterprise, you can compare the effects of market volatilities on KNH Enterprise and Nan Liu 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 KNH Enterprise with a short position of Nan Liu. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNH Enterprise and Nan Liu.

Diversification Opportunities for KNH Enterprise and Nan Liu

0.88

Correlation Coefficient

KNH Enterprise  Nan Liu

Very poor diversification

The 3 months correlation between KNH and Nan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KNH Enterprise Co and Nan Liu Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Liu Enterprise and KNH Enterprise 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 KNH Enterprise Co are associated (or correlated) with Nan Liu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Liu Enterprise has no effect on the direction of KNH Enterprise i.e., KNH Enterprise and Nan Liu go up and down completely randomly.

Pair Corralation between KNH Enterprise and Nan Liu

Assuming the 90 days trading horizon KNH Enterprise Co is expected to under-perform the Nan Liu. In addition to that, KNH Enterprise is 1.17 times more volatile than Nan Liu Enterprise. It trades about -0.16 of its total potential returns per unit of risk. Nan Liu Enterprise is currently generating about -0.17 per unit of volatility. If you would invest  7,060  in Nan Liu Enterprise on September 24, 2024 and sell it today you would lose (730.00) from holding Nan Liu Enterprise or give up 10.34% of portfolio value over 90 days.

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

KNH Enterprise Co  vs.  Nan Liu Enterprise

KNH Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KNH Enterprise Co 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.

Nan Liu Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nan Liu Enterprise 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 KNH Enterprise and Nan Liu

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

The idea behind KNH Enterprise Co and Nan Liu Enterprise 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.