Correlation Between Kuang Chi and Shanghai V-Test

Can any of the company-specific risk be diversified away by investing in both Kuang Chi and Shanghai V-Test 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 Kuang Chi and Shanghai V-Test into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kuang Chi Technologies and Shanghai V Test Semiconductor, you can compare the effects of market volatilities on Kuang Chi and Shanghai V-Test 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 Kuang Chi with a short position of Shanghai V-Test. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuang Chi and Shanghai V-Test.

Diversification Opportunities for Kuang Chi and Shanghai V-Test

-0.2

Correlation Coefficient

Kuang Chi  Shanghai V-Test

Good diversification

The 3 months correlation between Kuang and Shanghai is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kuang Chi Technologies and Shanghai V Test Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai V Test and Kuang Chi 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 Kuang Chi Technologies are associated (or correlated) with Shanghai V-Test. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai V Test has no effect on the direction of Kuang Chi i.e., Kuang Chi and Shanghai V-Test go up and down completely randomly.

Pair Corralation between Kuang Chi and Shanghai V-Test

Assuming the 90 days trading horizon Kuang Chi Technologies is expected to under-perform the Shanghai V-Test. But the stock apears to be less risky and, when comparing its historical volatility, Kuang Chi Technologies is 1.24 times less risky than Shanghai V-Test. The stock trades about -0.03 of its potential returns per unit of risk. The Shanghai V Test Semiconductor is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,906  in Shanghai V Test Semiconductor on December 25, 2024 and sell it today you would earn a total of  1,736  from holding Shanghai V Test Semiconductor or generate 29.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Kuang Chi Technologies  vs.  Shanghai V Test Semiconductor

Kuang Chi Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kuang Chi Technologies 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.

Shanghai V Test

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai V Test Semiconductor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai V-Test sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kuang Chi and Shanghai V-Test

The main advantage of trading using opposite Kuang Chi and Shanghai V-Test positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuang Chi position performs unexpectedly, Shanghai V-Test 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 Shanghai V-Test will offset losses from the drop in Shanghai V-Test's long position.

The idea behind Kuang Chi Technologies and Shanghai V Test Semiconductor 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.