Correlation Between Guangzhou KingTeller and Keda Clean

Can any of the company-specific risk be diversified away by investing in both Guangzhou KingTeller and Keda Clean 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 Keda Clean 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 Keda Clean Energy, you can compare the effects of market volatilities on Guangzhou KingTeller and Keda Clean 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 Keda Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou KingTeller and Keda Clean.

Diversification Opportunities for Guangzhou KingTeller and Keda Clean

0.27

Correlation Coefficient

Guangzhou KingTeller  Keda Clean

Modest diversification

The 3 months correlation between Guangzhou and Keda is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KingTeller Technolog and Keda Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keda Clean Energy 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 Keda Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keda Clean Energy has no effect on the direction of Guangzhou KingTeller i.e., Guangzhou KingTeller and Keda Clean go up and down completely randomly.

Pair Corralation between Guangzhou KingTeller and Keda Clean

Assuming the 90 days trading horizon Guangzhou KingTeller Technology is expected to generate 3.0 times more return on investment than Keda Clean. However, Guangzhou KingTeller is 3.0 times more volatile than Keda Clean Energy. It trades about 0.03 of its potential returns per unit of risk. Keda Clean Energy is currently generating about -0.08 per unit of risk. If you would invest  498.00  in Guangzhou KingTeller Technology on November 29, 2024 and sell it today you would earn a total of  7.00  from holding Guangzhou KingTeller Technology or generate 1.41% return on investment over 90 days.

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

Guangzhou KingTeller Technolog  vs.  Keda Clean Energy

Guangzhou KingTeller

Risk-Adjusted Performance

Weak

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

Keda Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Keda Clean Energy 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 Keda Clean

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

The idea behind Guangzhou KingTeller Technology and Keda Clean Energy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..