Correlation Between Kingsignal Technology and Hangzhou Guotai

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

By analyzing existing cross correlation between Kingsignal Technology Co and Hangzhou Guotai Environmental, you can compare the effects of market volatilities on Kingsignal Technology and Hangzhou Guotai 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 Kingsignal Technology with a short position of Hangzhou Guotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsignal Technology and Hangzhou Guotai.

Diversification Opportunities for Kingsignal Technology and Hangzhou Guotai

0.2

Correlation Coefficient

Kingsignal Technology  Hangzhou Guotai

Modest diversification

The 3 months correlation between Kingsignal and Hangzhou is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kingsignal Technology Co and Hangzhou Guotai Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Guotai Envi and Kingsignal 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 Kingsignal Technology Co are associated (or correlated) with Hangzhou Guotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Guotai Envi has no effect on the direction of Kingsignal Technology i.e., Kingsignal Technology and Hangzhou Guotai go up and down completely randomly.

Pair Corralation between Kingsignal Technology and Hangzhou Guotai

Assuming the 90 days trading horizon Kingsignal Technology Co is expected to generate 2.34 times more return on investment than Hangzhou Guotai. However, Kingsignal Technology is 2.34 times more volatile than Hangzhou Guotai Environmental. It trades about 0.08 of its potential returns per unit of risk. Hangzhou Guotai Environmental is currently generating about 0.07 per unit of risk. If you would invest  820.00  in Kingsignal Technology Co on October 11, 2024 and sell it today you would earn a total of  144.00  from holding Kingsignal Technology Co or generate 17.56% return on investment over 90 days.

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

Kingsignal Technology Co  vs.  Hangzhou Guotai Environmental

Kingsignal Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsignal Technology Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kingsignal Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Hangzhou Guotai Envi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hangzhou Guotai Environmental are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hangzhou Guotai may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kingsignal Technology and Hangzhou Guotai

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

The idea behind Kingsignal Technology Co and Hangzhou Guotai Environmental 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .