Correlation Between CITIC Guoan and Kingsignal Technology

Can any of the company-specific risk be diversified away by investing in both CITIC Guoan and Kingsignal Technology 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 CITIC Guoan and Kingsignal Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CITIC Guoan and Kingsignal Technology

0.32

Correlation Coefficient

CITIC Guoan  Kingsignal Technology

Weak diversification

The 3 months correlation between CITIC and Kingsignal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Guoan Information and Kingsignal Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsignal Technology and CITIC Guoan 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 CITIC Guoan Information are associated (or correlated) with Kingsignal Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsignal Technology has no effect on the direction of CITIC Guoan i.e., CITIC Guoan and Kingsignal Technology go up and down completely randomly.

Pair Corralation between CITIC Guoan and Kingsignal Technology

Assuming the 90 days trading horizon CITIC Guoan is expected to generate 1.89 times less return on investment than Kingsignal Technology. But when comparing it to its historical volatility, CITIC Guoan Information is 1.27 times less risky than Kingsignal Technology. It trades about 0.04 of its potential returns per unit of risk. Kingsignal Technology Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  877.00  in Kingsignal Technology Co on October 10, 2024 and sell it today you would earn a total of  87.00  from holding Kingsignal Technology Co or generate 9.92% return on investment over 90 days.

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

CITIC Guoan Information  vs.  Kingsignal Technology Co

CITIC Guoan Information

Risk-Adjusted Performance

2 of 100

Weak

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

Kingsignal Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsignal Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kingsignal Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Guoan and Kingsignal Technology

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

The idea behind CITIC Guoan Information and Kingsignal Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.