Correlation Between Kien Giang and Mechanics Construction

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

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

Diversification Opportunities for Kien Giang and Mechanics Construction

0.63

Correlation Coefficient

Kien Giang  Mechanics Construction

Poor diversification

The 3 months correlation between Kien and Mechanics is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kien Giang Construction and Mechanics Construction and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechanics Construction and Kien Giang 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 Kien Giang Construction are associated (or correlated) with Mechanics Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechanics Construction has no effect on the direction of Kien Giang i.e., Kien Giang and Mechanics Construction go up and down completely randomly.

Pair Corralation between Kien Giang and Mechanics Construction

Assuming the 90 days trading horizon Kien Giang Construction is expected to under-perform the Mechanics Construction. In addition to that, Kien Giang is 1.37 times more volatile than Mechanics Construction and. It trades about -0.17 of its total potential returns per unit of risk. Mechanics Construction and is currently generating about -0.04 per unit of volatility. If you would invest  880,000  in Mechanics Construction and on September 29, 2024 and sell it today you would lose (20,000) from holding Mechanics Construction and or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.21%
Values	Daily Returns

Kien Giang Construction  vs.  Mechanics Construction and

Kien Giang Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kien Giang Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mechanics Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mechanics Construction and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Mechanics Construction is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kien Giang and Mechanics Construction

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

The idea behind Kien Giang Construction and Mechanics Construction and 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..