Correlation Between Kuangda Technology and Ye Chiu

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

Diversification Opportunities for Kuangda Technology and Ye Chiu

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Kuangda and 601388 is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal 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 Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and Ye Chiu go up and down completely randomly.

Pair Corralation between Kuangda Technology and Ye Chiu

Assuming the 90 days trading horizon Kuangda Technology Group is expected to generate 0.89 times more return on investment than Ye Chiu. However, Kuangda Technology Group is 1.12 times less risky than Ye Chiu. It trades about 0.02 of its potential returns per unit of risk. Ye Chiu Metal is currently generating about 0.01 per unit of risk. If you would invest  506.00  in Kuangda Technology Group on September 27, 2024 and sell it today you would earn a total of  15.00  from holding Kuangda Technology Group or generate 2.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Kuangda Technology Group  vs.  Ye Chiu Metal

 Performance 
       Timeline  
Kuangda Technology 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Kuangda Technology Group are ranked lower than 9 (%) 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.
Ye Chiu Metal 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ye Chiu Metal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ye Chiu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kuangda Technology and Ye Chiu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kuangda Technology and Ye Chiu

The main advantage of trading using opposite Kuangda Technology and Ye Chiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuangda Technology position performs unexpectedly, Ye Chiu 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 Ye Chiu will offset losses from the drop in Ye Chiu's long position.
The idea behind Kuangda Technology Group and Ye Chiu Metal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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