Correlation Between Kangyue Technology and Gan Yuan

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

Diversification Opportunities for Kangyue Technology and Gan Yuan

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kangyue and Gan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kangyue Technology Co and Gan Yuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Yuan Foods and Kangyue 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 Kangyue Technology Co are associated (or correlated) with Gan Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Yuan Foods has no effect on the direction of Kangyue Technology i.e., Kangyue Technology and Gan Yuan go up and down completely randomly.

Pair Corralation between Kangyue Technology and Gan Yuan

Assuming the 90 days trading horizon Kangyue Technology Co is expected to generate 2.18 times more return on investment than Gan Yuan. However, Kangyue Technology is 2.18 times more volatile than Gan Yuan Foods. It trades about 0.18 of its potential returns per unit of risk. Gan Yuan Foods is currently generating about 0.3 per unit of risk. If you would invest  354.00  in Kangyue Technology Co on September 17, 2024 and sell it today you would earn a total of  327.00  from holding Kangyue Technology Co or generate 92.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Kangyue Technology Co  vs.  Gan Yuan Foods

 Performance 
       Timeline  
Kangyue Technology 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Kangyue Technology Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kangyue Technology sustained solid returns over the last few months and may actually be approaching a breakup point.
Gan Yuan Foods 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Gan Yuan Foods are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gan Yuan sustained solid returns over the last few months and may actually be approaching a breakup point.

Kangyue Technology and Gan Yuan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kangyue Technology and Gan Yuan

The main advantage of trading using opposite Kangyue Technology and Gan Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kangyue Technology position performs unexpectedly, Gan Yuan 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 Gan Yuan will offset losses from the drop in Gan Yuan's long position.
The idea behind Kangyue Technology Co and Gan Yuan Foods 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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