Correlation Between Shenzhen Centralcon and Kontour Medical

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

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

Diversification Opportunities for Shenzhen Centralcon and Kontour Medical

0.31

Correlation Coefficient

Shenzhen Centralcon  Kontour Medical

Weak diversification

The 3 months correlation between Shenzhen and Kontour is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Centralcon Investment and Kontour Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontour Medical Tech and Shenzhen Centralcon 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 Centralcon Investment are associated (or correlated) with Kontour Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontour Medical Tech has no effect on the direction of Shenzhen Centralcon i.e., Shenzhen Centralcon and Kontour Medical go up and down completely randomly.

Pair Corralation between Shenzhen Centralcon and Kontour Medical

Assuming the 90 days trading horizon Shenzhen Centralcon Investment is expected to under-perform the Kontour Medical. In addition to that, Shenzhen Centralcon is 1.29 times more volatile than Kontour Medical Technology. It trades about -0.27 of its total potential returns per unit of risk. Kontour Medical Technology is currently generating about 0.08 per unit of volatility. If you would invest  2,900  in Kontour Medical Technology on October 25, 2024 and sell it today you would earn a total of  102.00  from holding Kontour Medical Technology or generate 3.52% return on investment over 90 days.

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

Shenzhen Centralcon Investment  vs.  Kontour Medical Technology

Shenzhen Centralcon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Centralcon Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kontour Medical Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kontour Medical Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kontour Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenzhen Centralcon and Kontour Medical

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

The idea behind Shenzhen Centralcon Investment and Kontour Medical Technology 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.