Correlation Between Gifore Agricultural and Kuang Chi

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Can any of the company-specific risk be diversified away by investing in both Gifore Agricultural and Kuang Chi 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 Gifore Agricultural and Kuang Chi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gifore Agricultural Machinery and Kuang Chi Technologies, you can compare the effects of market volatilities on Gifore Agricultural and Kuang Chi 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 Gifore Agricultural with a short position of Kuang Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gifore Agricultural and Kuang Chi.

Diversification Opportunities for Gifore Agricultural and Kuang Chi

0.52
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between Gifore Agricultural and Kuang Chi

Assuming the 90 days trading horizon Gifore Agricultural Machinery is expected to under-perform the Kuang Chi. In addition to that, Gifore Agricultural is 1.1 times more volatile than Kuang Chi Technologies. It trades about -0.19 of its total potential returns per unit of risk. Kuang Chi Technologies is currently generating about 0.01 per unit of volatility. If you would invest  4,143  in Kuang Chi Technologies on October 12, 2024 and sell it today you would lose (20.00) from holding Kuang Chi Technologies or give up 0.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Gifore Agricultural Machinery  vs.  Kuang Chi Technologies

 Performance 
       Timeline  
Gifore Agricultural 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Gifore Agricultural Machinery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gifore Agricultural may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Kuang Chi Technologies 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Kuang Chi Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kuang Chi sustained solid returns over the last few months and may actually be approaching a breakup point.

Gifore Agricultural and Kuang Chi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gifore Agricultural and Kuang Chi

The main advantage of trading using opposite Gifore Agricultural and Kuang Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gifore Agricultural position performs unexpectedly, Kuang Chi 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 Kuang Chi will offset losses from the drop in Kuang Chi's long position.
The idea behind Gifore Agricultural Machinery and Kuang Chi Technologies 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.
Check out your portfolio center.
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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