Correlation Between Shenzhen Kaifa and BizConf Telecom

Can any of the company-specific risk be diversified away by investing in both Shenzhen Kaifa and BizConf Telecom 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 Shenzhen Kaifa and BizConf Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Kaifa Technology and BizConf Telecom Co, you can compare the effects of market volatilities on Shenzhen Kaifa and BizConf Telecom 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 Shenzhen Kaifa with a short position of BizConf Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Kaifa and BizConf Telecom.

Diversification Opportunities for Shenzhen Kaifa and BizConf Telecom

0.79

Correlation Coefficient

Shenzhen Kaifa  BizConf Telecom

Poor diversification

The 3 months correlation between Shenzhen and BizConf is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Kaifa Technology and BizConf Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BizConf Telecom and Shenzhen Kaifa 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 Shenzhen Kaifa Technology are associated (or correlated) with BizConf Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BizConf Telecom has no effect on the direction of Shenzhen Kaifa i.e., Shenzhen Kaifa and BizConf Telecom go up and down completely randomly.

Pair Corralation between Shenzhen Kaifa and BizConf Telecom

Assuming the 90 days trading horizon Shenzhen Kaifa is expected to generate 1.2 times less return on investment than BizConf Telecom. But when comparing it to its historical volatility, Shenzhen Kaifa Technology is 1.35 times less risky than BizConf Telecom. It trades about 0.04 of its potential returns per unit of risk. BizConf Telecom Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,786  in BizConf Telecom Co on October 22, 2024 and sell it today you would earn a total of  56.00  from holding BizConf Telecom Co or generate 3.14% return on investment over 90 days.

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

Shenzhen Kaifa Technology  vs.  BizConf Telecom Co

Shenzhen Kaifa Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Kaifa Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Kaifa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BizConf Telecom

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BizConf Telecom Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BizConf Telecom may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shenzhen Kaifa and BizConf Telecom

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

The idea behind Shenzhen Kaifa Technology and BizConf Telecom Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.