Correlation Between Kinik and Great Wall

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

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

Diversification Opportunities for Kinik and Great Wall

-0.52

Correlation Coefficient

Kinik  Great Wall

Excellent diversification

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

Pair Corralation between Kinik and Great Wall

Assuming the 90 days trading horizon Kinik Co is expected to under-perform the Great Wall. In addition to that, Kinik is 4.05 times more volatile than Great Wall Enterprise. It trades about -0.26 of its total potential returns per unit of risk. Great Wall Enterprise is currently generating about 0.15 per unit of volatility. If you would invest  5,120  in Great Wall Enterprise on September 17, 2024 and sell it today you would earn a total of  180.00  from holding Great Wall Enterprise or generate 3.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.73%
Values	Daily Returns

Kinik Co  vs.  Great Wall Enterprise

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

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.

Pair Trading with Kinik and Great Wall

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

The idea behind Kinik Co and Great Wall Enterprise 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.