Correlation Between Great Wall and Kinik

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

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

Diversification Opportunities for Great Wall and Kinik

-0.52

Correlation Coefficient

Great Wall  Kinik

Excellent diversification

The 3 months correlation between Great and Kinik is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Kinik Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinik and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Kinik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinik has no effect on the direction of Great Wall i.e., Great Wall and Kinik go up and down completely randomly.

Pair Corralation between Great Wall and Kinik

Assuming the 90 days trading horizon Great Wall is expected to generate 6.29 times less return on investment than Kinik. But when comparing it to its historical volatility, Great Wall Enterprise is 2.34 times less risky than Kinik. It trades about 0.03 of its potential returns per unit of risk. Kinik Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,850  in Kinik Co on September 17, 2024 and sell it today you would earn a total of  18,550  from holding Kinik Co or generate 170.97% return on investment over 90 days.

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

Great Wall Enterprise  vs.  Kinik Co

Great Wall Enterprise

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great Wall Enterprise are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Great Wall is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kinik

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinik Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kinik 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 Great Wall and Kinik

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

The idea behind Great Wall Enterprise and Kinik Co 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.