Correlation Between China Mobile and K Way

Can any of the company-specific risk be diversified away by investing in both China Mobile and K Way 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 China Mobile and K Way into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Mobile and K Way Information, you can compare the effects of market volatilities on China Mobile and K Way 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 China Mobile with a short position of K Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and K Way.

Diversification Opportunities for China Mobile and K Way

0.32

Correlation Coefficient

China Mobile  K Way

Weak diversification

The 3 months correlation between China and 5201 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and China Mobile 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 China Mobile are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of China Mobile i.e., China Mobile and K Way go up and down completely randomly.

Pair Corralation between China Mobile and K Way

Assuming the 90 days trading horizon China Mobile is expected to generate 17.94 times less return on investment than K Way. But when comparing it to its historical volatility, China Mobile is 1.36 times less risky than K Way. It trades about 0.01 of its potential returns per unit of risk. K Way Information is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,705  in K Way Information on September 15, 2024 and sell it today you would earn a total of  155.00  from holding K Way Information or generate 5.73% return on investment over 90 days.

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

China Mobile  vs.  K Way Information

China Mobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, China Mobile is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

K Way Information

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in K Way Information are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, K Way is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with China Mobile and K Way

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

The idea behind China Mobile and K Way Information 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.