Correlation Between Kuangda Technology and Vontron Technology

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

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

Diversification Opportunities for Kuangda Technology and Vontron Technology

0.91

Correlation Coefficient

Kuangda Technology  Vontron Technology

Almost no diversification

The 3 months correlation between Kuangda and Vontron is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and Vontron Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontron Technology and Kuangda Technology 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 Kuangda Technology Group are associated (or correlated) with Vontron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontron Technology has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and Vontron Technology go up and down completely randomly.

Pair Corralation between Kuangda Technology and Vontron Technology

Assuming the 90 days trading horizon Kuangda Technology Group is expected to generate 2.66 times more return on investment than Vontron Technology. However, Kuangda Technology is 2.66 times more volatile than Vontron Technology Co. It trades about 0.02 of its potential returns per unit of risk. Vontron Technology Co is currently generating about -0.02 per unit of risk. If you would invest  531.00  in Kuangda Technology Group on September 25, 2024 and sell it today you would lose (1.00) from holding Kuangda Technology Group or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Kuangda Technology Group  vs.  Vontron Technology Co

Kuangda Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kuangda Technology Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kuangda Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Vontron Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vontron Technology Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vontron Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kuangda Technology and Vontron Technology

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

The idea behind Kuangda Technology Group and Vontron 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.