Correlation Between Guangzhou KingTeller and ISoftStone Information

Can any of the company-specific risk be diversified away by investing in both Guangzhou KingTeller and ISoftStone Information 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 Guangzhou KingTeller and ISoftStone Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Guangzhou KingTeller and ISoftStone Information

0.16

Correlation Coefficient

Guangzhou KingTeller  ISoftStone Information

Average diversification

The 3 months correlation between Guangzhou and ISoftStone is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KingTeller Technolog and iSoftStone Information Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSoftStone Information and Guangzhou KingTeller 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 Guangzhou KingTeller Technology are associated (or correlated) with ISoftStone Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSoftStone Information has no effect on the direction of Guangzhou KingTeller i.e., Guangzhou KingTeller and ISoftStone Information go up and down completely randomly.

Pair Corralation between Guangzhou KingTeller and ISoftStone Information

Assuming the 90 days trading horizon Guangzhou KingTeller Technology is expected to generate 1.52 times more return on investment than ISoftStone Information. However, Guangzhou KingTeller is 1.52 times more volatile than iSoftStone Information Technology. It trades about -0.01 of its potential returns per unit of risk. iSoftStone Information Technology is currently generating about -0.15 per unit of risk. If you would invest  448.00  in Guangzhou KingTeller Technology on October 6, 2024 and sell it today you would lose (28.00) from holding Guangzhou KingTeller Technology or give up 6.25% of portfolio value over 90 days.

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

Guangzhou KingTeller Technolog  vs.  iSoftStone Information Technol

Guangzhou KingTeller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou KingTeller Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

iSoftStone Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSoftStone Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Guangzhou KingTeller and ISoftStone Information

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

The idea behind Guangzhou KingTeller Technology and iSoftStone Information 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.