Correlation Between Kuangda Technology and Xiangpiaopiao Food

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

Diversification Opportunities for Kuangda Technology and Xiangpiaopiao Food

0.57

Correlation Coefficient

Kuangda Technology  Xiangpiaopiao Food

Very weak diversification

The 3 months correlation between Kuangda and Xiangpiaopiao is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and Xiangpiaopiao Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangpiaopiao Food 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 Xiangpiaopiao Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangpiaopiao Food has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and Xiangpiaopiao Food go up and down completely randomly.

Pair Corralation between Kuangda Technology and Xiangpiaopiao Food

Assuming the 90 days trading horizon Kuangda Technology Group is expected to under-perform the Xiangpiaopiao Food. But the stock apears to be less risky and, when comparing its historical volatility, Kuangda Technology Group is 1.9 times less risky than Xiangpiaopiao Food. The stock trades about -0.37 of its potential returns per unit of risk. The Xiangpiaopiao Food Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,590  in Xiangpiaopiao Food Co on October 7, 2024 and sell it today you would lose (28.00) from holding Xiangpiaopiao Food Co or give up 1.76% of portfolio value over 90 days.

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

Kuangda Technology Group  vs.  Xiangpiaopiao Food Co

Kuangda Technology

Risk-Adjusted Performance

0 of 100

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.

Xiangpiaopiao Food

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangpiaopiao Food Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangpiaopiao Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kuangda Technology and Xiangpiaopiao Food

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

The idea behind Kuangda Technology Group and Xiangpiaopiao Food 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.