Correlation Between Kangyue Technology and Nanjing Putian

Can any of the company-specific risk be diversified away by investing in both Kangyue Technology and Nanjing Putian 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 Nanjing Putian 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 Nanjing Putian Telecommunications, you can compare the effects of market volatilities on Kangyue Technology and Nanjing Putian 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 Nanjing Putian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kangyue Technology and Nanjing Putian.

Diversification Opportunities for Kangyue Technology and Nanjing Putian

0.63

Correlation Coefficient

Kangyue Technology  Nanjing Putian

Poor diversification

The 3 months correlation between Kangyue and Nanjing is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kangyue Technology Co and Nanjing Putian Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Putian Telec 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 Nanjing Putian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Putian Telec has no effect on the direction of Kangyue Technology i.e., Kangyue Technology and Nanjing Putian go up and down completely randomly.

Pair Corralation between Kangyue Technology and Nanjing Putian

Assuming the 90 days trading horizon Kangyue Technology Co is expected to under-perform the Nanjing Putian. In addition to that, Kangyue Technology is 1.23 times more volatile than Nanjing Putian Telecommunications. It trades about -0.05 of its total potential returns per unit of risk. Nanjing Putian Telecommunications is currently generating about -0.04 per unit of volatility. If you would invest  437.00  in Nanjing Putian Telecommunications on December 4, 2024 and sell it today you would lose (51.00) from holding Nanjing Putian Telecommunications or give up 11.67% of portfolio value over 90 days.

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

Kangyue Technology Co  vs.  Nanjing Putian Telecommunicati

Kangyue Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kangyue Technology Co 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nanjing Putian Telec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nanjing Putian Telecommunications 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 Kangyue Technology and Nanjing Putian

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

The idea behind Kangyue Technology Co and Nanjing Putian Telecommunications 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .