Correlation Between Aier Eye and Keda Clean

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

By analyzing existing cross correlation between Aier Eye Hospital and Keda Clean Energy, you can compare the effects of market volatilities on Aier Eye and Keda Clean 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 Aier Eye with a short position of Keda Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aier Eye and Keda Clean.

Diversification Opportunities for Aier Eye and Keda Clean

0.77

Correlation Coefficient

Aier Eye  Keda Clean

Poor diversification

The 3 months correlation between Aier and Keda is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aier Eye Hospital and Keda Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keda Clean Energy and Aier Eye 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 Aier Eye Hospital are associated (or correlated) with Keda Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keda Clean Energy has no effect on the direction of Aier Eye i.e., Aier Eye and Keda Clean go up and down completely randomly.

Pair Corralation between Aier Eye and Keda Clean

Assuming the 90 days trading horizon Aier Eye Hospital is expected to generate 1.37 times more return on investment than Keda Clean. However, Aier Eye is 1.37 times more volatile than Keda Clean Energy. It trades about -0.03 of its potential returns per unit of risk. Keda Clean Energy is currently generating about -0.06 per unit of risk. If you would invest  2,431  in Aier Eye Hospital on September 29, 2024 and sell it today you would lose (1,054) from holding Aier Eye Hospital or give up 43.36% of portfolio value over 90 days.

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

Aier Eye Hospital  vs.  Keda Clean Energy

Aier Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aier Eye Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Keda Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keda Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aier Eye and Keda Clean

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

The idea behind Aier Eye Hospital and Keda Clean Energy 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.