Correlation Between Kangyue Technology and Zhongtong Guomai

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

Diversification Opportunities for Kangyue Technology and Zhongtong Guomai

0.66

Correlation Coefficient

Kangyue Technology  Zhongtong Guomai

Poor diversification

The 3 months correlation between Kangyue and Zhongtong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kangyue Technology Co and Zhongtong Guomai Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongtong Guomai Com 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 Zhongtong Guomai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongtong Guomai Com has no effect on the direction of Kangyue Technology i.e., Kangyue Technology and Zhongtong Guomai go up and down completely randomly.

Pair Corralation between Kangyue Technology and Zhongtong Guomai

Assuming the 90 days trading horizon Kangyue Technology Co is expected to under-perform the Zhongtong Guomai. In addition to that, Kangyue Technology is 1.25 times more volatile than Zhongtong Guomai Communication. It trades about -0.04 of its total potential returns per unit of risk. Zhongtong Guomai Communication is currently generating about 0.12 per unit of volatility. If you would invest  741.00  in Zhongtong Guomai Communication on October 8, 2024 and sell it today you would earn a total of  260.00  from holding Zhongtong Guomai Communication or generate 35.09% return on investment over 90 days.

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

Kangyue Technology Co  vs.  Zhongtong Guomai Communication

Kangyue Technology

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zhongtong Guomai Com

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongtong Guomai Communication are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongtong Guomai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kangyue Technology and Zhongtong Guomai

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

The idea behind Kangyue Technology Co and Zhongtong Guomai 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.

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 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.