Correlation Between Keyang Electric and Cube Entertainment

Can any of the company-specific risk be diversified away by investing in both Keyang Electric and Cube Entertainment 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 Keyang Electric and Cube Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Keyang Electric Machinery and Cube Entertainment, you can compare the effects of market volatilities on Keyang Electric and Cube Entertainment 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 Keyang Electric with a short position of Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and Cube Entertainment.

Diversification Opportunities for Keyang Electric and Cube Entertainment

-0.41

Correlation Coefficient

Keyang Electric  Cube Entertainment

Very good diversification

The 3 months correlation between Keyang and Cube is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment and Keyang Electric 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 Keyang Electric Machinery are associated (or correlated) with Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Keyang Electric i.e., Keyang Electric and Cube Entertainment go up and down completely randomly.

Pair Corralation between Keyang Electric and Cube Entertainment

Assuming the 90 days trading horizon Keyang Electric Machinery is expected to generate 0.9 times more return on investment than Cube Entertainment. However, Keyang Electric Machinery is 1.11 times less risky than Cube Entertainment. It trades about 0.28 of its potential returns per unit of risk. Cube Entertainment is currently generating about -0.06 per unit of risk. If you would invest  349,500  in Keyang Electric Machinery on October 12, 2024 and sell it today you would earn a total of  50,500  from holding Keyang Electric Machinery or generate 14.45% return on investment over 90 days.

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

Keyang Electric Machinery  vs.  Cube Entertainment

Keyang Electric Machinery

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keyang Electric Machinery are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Keyang Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cube Entertainment

Risk-Adjusted Performance

6 of 100

OK

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

Pair Trading with Keyang Electric and Cube Entertainment

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

The idea behind Keyang Electric Machinery and Cube Entertainment 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.