Correlation Between Changzhou Almaden and Kingsignal Technology

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

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

Diversification Opportunities for Changzhou Almaden and Kingsignal Technology

-0.01

Correlation Coefficient

Changzhou Almaden  Kingsignal Technology

Good diversification

The 3 months correlation between Changzhou and Kingsignal is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and Kingsignal Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsignal Technology and Changzhou Almaden 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 Changzhou Almaden Co are associated (or correlated) with Kingsignal Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsignal Technology has no effect on the direction of Changzhou Almaden i.e., Changzhou Almaden and Kingsignal Technology go up and down completely randomly.

Pair Corralation between Changzhou Almaden and Kingsignal Technology

Assuming the 90 days trading horizon Changzhou Almaden Co is expected to under-perform the Kingsignal Technology. But the stock apears to be less risky and, when comparing its historical volatility, Changzhou Almaden Co is 1.79 times less risky than Kingsignal Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Kingsignal Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  862.00  in Kingsignal Technology Co on October 7, 2024 and sell it today you would earn a total of  54.00  from holding Kingsignal Technology Co or generate 6.26% return on investment over 90 days.

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

Changzhou Almaden Co  vs.  Kingsignal Technology Co

Changzhou Almaden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changzhou Almaden Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kingsignal Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Changzhou Almaden and Kingsignal Technology

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

The idea behind Changzhou Almaden Co and Kingsignal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.