Correlation Between Guangdong Jingyi and Keli Sensing

Can any of the company-specific risk be diversified away by investing in both Guangdong Jingyi and Keli Sensing 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 Guangdong Jingyi and Keli Sensing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Jingyi Metal and Keli Sensing Technology, you can compare the effects of market volatilities on Guangdong Jingyi and Keli Sensing 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 Guangdong Jingyi with a short position of Keli Sensing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and Keli Sensing.

Diversification Opportunities for Guangdong Jingyi and Keli Sensing

0.29

Correlation Coefficient

Guangdong Jingyi  Keli Sensing

Modest diversification

The 3 months correlation between Guangdong and Keli is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Keli Sensing Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keli Sensing Technology and Guangdong Jingyi 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 Guangdong Jingyi Metal are associated (or correlated) with Keli Sensing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keli Sensing Technology has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Keli Sensing go up and down completely randomly.

Pair Corralation between Guangdong Jingyi and Keli Sensing

Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 0.47 times more return on investment than Keli Sensing. However, Guangdong Jingyi Metal is 2.11 times less risky than Keli Sensing. It trades about 0.12 of its potential returns per unit of risk. Keli Sensing Technology is currently generating about 0.02 per unit of risk. If you would invest  682.00  in Guangdong Jingyi Metal on December 26, 2024 and sell it today you would earn a total of  97.00  from holding Guangdong Jingyi Metal or generate 14.22% return on investment over 90 days.

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

Guangdong Jingyi Metal  vs.  Keli Sensing Technology

Guangdong Jingyi Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Keli Sensing Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keli Sensing Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Keli Sensing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guangdong Jingyi and Keli Sensing

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

The idea behind Guangdong Jingyi Metal and Keli Sensing 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.