Correlation Between Kuangda Technology and Shenzhen MYS

Can any of the company-specific risk be diversified away by investing in both Kuangda Technology and Shenzhen MYS 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 Shenzhen MYS 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 Shenzhen MYS Environmental, you can compare the effects of market volatilities on Kuangda Technology and Shenzhen MYS 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 Shenzhen MYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuangda Technology and Shenzhen MYS.

Diversification Opportunities for Kuangda Technology and Shenzhen MYS

0.82

Correlation Coefficient

Kuangda Technology  Shenzhen MYS

Very poor diversification

The 3 months correlation between Kuangda and Shenzhen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and Shenzhen MYS Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen MYS Environ 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 Shenzhen MYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen MYS Environ has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and Shenzhen MYS go up and down completely randomly.

Pair Corralation between Kuangda Technology and Shenzhen MYS

Assuming the 90 days trading horizon Kuangda Technology Group is expected to generate 1.13 times more return on investment than Shenzhen MYS. However, Kuangda Technology is 1.13 times more volatile than Shenzhen MYS Environmental. It trades about -0.03 of its potential returns per unit of risk. Shenzhen MYS Environmental is currently generating about -0.1 per unit of risk. If you would invest  532.00  in Kuangda Technology Group on December 2, 2024 and sell it today you would lose (35.00) from holding Kuangda Technology Group or give up 6.58% of portfolio value over 90 days.

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

Kuangda Technology Group  vs.  Shenzhen MYS Environmental

Kuangda Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kuangda Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kuangda Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shenzhen MYS Environ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen MYS Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kuangda Technology and Shenzhen MYS

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

The idea behind Kuangda Technology Group and Shenzhen MYS Environmental 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.