Correlation Between Eugene Technology and KG Eco

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

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

Diversification Opportunities for Eugene Technology and KG Eco

0.81

Correlation Coefficient

Eugene Technology  KG Eco

Very poor diversification

The 3 months correlation between Eugene and 151860 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology and Eugene Technology 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 Eugene Technology CoLtd are associated (or correlated) with KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of Eugene Technology i.e., Eugene Technology and KG Eco go up and down completely randomly.

Pair Corralation between Eugene Technology and KG Eco

Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to generate 1.54 times more return on investment than KG Eco. However, Eugene Technology is 1.54 times more volatile than KG Eco Technology. It trades about 0.14 of its potential returns per unit of risk. KG Eco Technology is currently generating about 0.05 per unit of risk. If you would invest  3,112,312  in Eugene Technology CoLtd on December 29, 2024 and sell it today you would earn a total of  807,688  from holding Eugene Technology CoLtd or generate 25.95% return on investment over 90 days.

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

Eugene Technology CoLtd  vs.  KG Eco Technology

Eugene Technology CoLtd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eugene Technology CoLtd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eugene Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

KG Eco Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KG Eco Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KG Eco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eugene Technology and KG Eco

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

The idea behind Eugene Technology CoLtd and KG Eco Technology 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.