Correlation Between COL Digital and Shenzhen Kexin

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

By analyzing existing cross correlation between COL Digital Publishing and Shenzhen Kexin Communication, you can compare the effects of market volatilities on COL Digital and Shenzhen Kexin 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 COL Digital with a short position of Shenzhen Kexin. Check out your portfolio center. Please also check ongoing floating volatility patterns of COL Digital and Shenzhen Kexin.

Diversification Opportunities for COL Digital and Shenzhen Kexin

0.62

Correlation Coefficient

COL Digital  Shenzhen Kexin

Poor diversification

The 3 months correlation between COL and Shenzhen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding COL Digital Publishing and Shenzhen Kexin Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Kexin Commu and COL Digital 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 COL Digital Publishing are associated (or correlated) with Shenzhen Kexin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Kexin Commu has no effect on the direction of COL Digital i.e., COL Digital and Shenzhen Kexin go up and down completely randomly.

Pair Corralation between COL Digital and Shenzhen Kexin

Assuming the 90 days trading horizon COL Digital Publishing is expected to generate 1.29 times more return on investment than Shenzhen Kexin. However, COL Digital is 1.29 times more volatile than Shenzhen Kexin Communication. It trades about -0.15 of its potential returns per unit of risk. Shenzhen Kexin Communication is currently generating about -0.29 per unit of risk. If you would invest  2,973  in COL Digital Publishing on October 6, 2024 and sell it today you would lose (760.00) from holding COL Digital Publishing or give up 25.56% of portfolio value over 90 days.

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

COL Digital Publishing  vs.  Shenzhen Kexin Communication

COL Digital Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COL Digital Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shenzhen Kexin Commu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Kexin Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with COL Digital and Shenzhen Kexin

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

The idea behind COL Digital Publishing and Shenzhen Kexin Communication 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.