Correlation Between Four Seasons and Top KingWin

Can any of the company-specific risk be diversified away by investing in both Four Seasons and Top KingWin 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 Four Seasons and Top KingWin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Four Seasons Education and Top KingWin Ltd, you can compare the effects of market volatilities on Four Seasons and Top KingWin 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 Four Seasons with a short position of Top KingWin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Seasons and Top KingWin.

Diversification Opportunities for Four Seasons and Top KingWin

0.66

Correlation Coefficient

Four Seasons  Top KingWin

Poor diversification

The 3 months correlation between Four and Top is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and Top KingWin Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top KingWin and Four Seasons 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 Four Seasons Education are associated (or correlated) with Top KingWin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top KingWin has no effect on the direction of Four Seasons i.e., Four Seasons and Top KingWin go up and down completely randomly.

Pair Corralation between Four Seasons and Top KingWin

Given the investment horizon of 90 days Four Seasons is expected to generate 4.85 times less return on investment than Top KingWin. But when comparing it to its historical volatility, Four Seasons Education is 3.5 times less risky than Top KingWin. It trades about 0.06 of its potential returns per unit of risk. Top KingWin Ltd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Top KingWin Ltd on September 15, 2024 and sell it today you would earn a total of  8.00  from holding Top KingWin Ltd or generate 25.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Four Seasons Education  vs.  Top KingWin Ltd

Four Seasons Education

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Four Seasons Education are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Four Seasons unveiled solid returns over the last few months and may actually be approaching a breakup point.

Top KingWin

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Top KingWin Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward-looking indicators, Top KingWin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Four Seasons and Top KingWin

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

The idea behind Four Seasons Education and Top KingWin Ltd 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.