Correlation Between KNH Enterprise and Luo Lih
Can any of the company-specific risk be diversified away by investing in both KNH Enterprise and Luo Lih 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 Luo Lih 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 Luo Lih Fen, you can compare the effects of market volatilities on KNH Enterprise and Luo Lih 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 Luo Lih. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNH Enterprise and Luo Lih.
Diversification Opportunities for KNH Enterprise and Luo Lih
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KNH and Luo is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding KNH Enterprise Co and Luo Lih Fen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luo Lih Fen 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 Luo Lih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luo Lih Fen has no effect on the direction of KNH Enterprise i.e., KNH Enterprise and Luo Lih go up and down completely randomly.
Pair Corralation between KNH Enterprise and Luo Lih
Assuming the 90 days trading horizon KNH Enterprise Co is expected to generate 0.56 times more return on investment than Luo Lih. However, KNH Enterprise Co is 1.77 times less risky than Luo Lih. It trades about -0.16 of its potential returns per unit of risk. Luo Lih Fen is currently generating about -0.11 per unit of risk. If you would invest 1,955 in KNH Enterprise Co on September 24, 2024 and sell it today you would lose (225.00) from holding KNH Enterprise Co or give up 11.51% 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. Luo Lih Fen
Performance |
Timeline |
KNH Enterprise |
Luo Lih Fen |
KNH Enterprise and Luo Lih Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KNH Enterprise and Luo Lih
The main advantage of trading using opposite KNH Enterprise and Luo Lih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNH Enterprise position performs unexpectedly, Luo Lih 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 Luo Lih will offset losses from the drop in Luo Lih's long position.KNH Enterprise vs. Taisun Enterprise Co | KNH Enterprise vs. De Licacy Industrial | KNH Enterprise vs. Wisher Industrial Co | KNH Enterprise vs. Tainan Enterprises Co |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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