Correlation Between KHVATEC CoLtd and Wemade CoLtd

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

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

Diversification Opportunities for KHVATEC CoLtd and Wemade CoLtd

0.02

Correlation Coefficient

KHVATEC CoLtd  Wemade CoLtd

Significant diversification

The 3 months correlation between KHVATEC and Wemade is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding KHVATEC CoLtd and Wemade CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wemade CoLtd and KHVATEC CoLtd 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 KHVATEC CoLtd are associated (or correlated) with Wemade CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wemade CoLtd has no effect on the direction of KHVATEC CoLtd i.e., KHVATEC CoLtd and Wemade CoLtd go up and down completely randomly.

Pair Corralation between KHVATEC CoLtd and Wemade CoLtd

Assuming the 90 days trading horizon KHVATEC CoLtd is expected to generate 1.09 times more return on investment than Wemade CoLtd. However, KHVATEC CoLtd is 1.09 times more volatile than Wemade CoLtd. It trades about 0.09 of its potential returns per unit of risk. Wemade CoLtd is currently generating about -0.08 per unit of risk. If you would invest  809,331  in KHVATEC CoLtd on December 2, 2024 and sell it today you would earn a total of  133,669  from holding KHVATEC CoLtd or generate 16.52% return on investment over 90 days.

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

KHVATEC CoLtd  vs.  Wemade CoLtd

KHVATEC CoLtd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KHVATEC CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KHVATEC CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Wemade CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wemade CoLtd 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KHVATEC CoLtd and Wemade CoLtd

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

The idea behind KHVATEC CoLtd and Wemade CoLtd 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..