Correlation Between 36Kr Holdings and Locafy

Can any of the company-specific risk be diversified away by investing in both 36Kr Holdings and Locafy 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 36Kr Holdings and Locafy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 36Kr Holdings and Locafy Limited, you can compare the effects of market volatilities on 36Kr Holdings and Locafy 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 36Kr Holdings with a short position of Locafy. Check out your portfolio center. Please also check ongoing floating volatility patterns of 36Kr Holdings and Locafy.

Diversification Opportunities for 36Kr Holdings and Locafy

0.59

Correlation Coefficient

36Kr Holdings  Locafy

Very weak diversification

The 3 months correlation between 36Kr and Locafy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding 36Kr Holdings and Locafy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy Limited and 36Kr Holdings 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 36Kr Holdings are associated (or correlated) with Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy Limited has no effect on the direction of 36Kr Holdings i.e., 36Kr Holdings and Locafy go up and down completely randomly.

Pair Corralation between 36Kr Holdings and Locafy

Given the investment horizon of 90 days 36Kr Holdings is expected to under-perform the Locafy. But the stock apears to be less risky and, when comparing its historical volatility, 36Kr Holdings is 5.1 times less risky than Locafy. The stock trades about -0.05 of its potential returns per unit of risk. The Locafy Limited is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Locafy Limited on February 2, 2024 and sell it today you would earn a total of  78.00  from holding Locafy Limited or generate 34.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	47.83%
Values	Daily Returns

36Kr Holdings  vs.  Locafy Limited

36Kr Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 36Kr Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Locafy Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Locafy Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Locafy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 36Kr Holdings and Locafy

The main advantage of trading using opposite 36Kr Holdings and Locafy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 36Kr Holdings position performs unexpectedly, Locafy 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 Locafy will offset losses from the drop in Locafy's long position.

The idea behind 36Kr Holdings and Locafy Limited 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.