Correlation Between Kuangda Technology and China Publishing

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

Diversification Opportunities for Kuangda Technology and China Publishing

0.23

Correlation Coefficient

Kuangda Technology  China Publishing

Modest diversification

The 3 months correlation between Kuangda and China is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and China Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Publishing Media 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 China Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Publishing Media has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and China Publishing go up and down completely randomly.

Pair Corralation between Kuangda Technology and China Publishing

Assuming the 90 days trading horizon Kuangda Technology Group is expected to generate 1.07 times more return on investment than China Publishing. However, Kuangda Technology is 1.07 times more volatile than China Publishing Media. It trades about 0.03 of its potential returns per unit of risk. China Publishing Media is currently generating about -0.06 per unit of risk. If you would invest  521.00  in Kuangda Technology Group on December 25, 2024 and sell it today you would earn a total of  12.00  from holding Kuangda Technology Group or generate 2.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Kuangda Technology Group  vs.  China Publishing Media

Kuangda Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kuangda Technology Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

China Publishing Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Publishing Media 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 Kuangda Technology and China Publishing

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

The idea behind Kuangda Technology Group and China Publishing Media 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.