Correlation Between Shijiazhuang Tonhe and Guangzhou KingTeller

Can any of the company-specific risk be diversified away by investing in both Shijiazhuang Tonhe and Guangzhou KingTeller 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 Shijiazhuang Tonhe and Guangzhou KingTeller into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shijiazhuang Tonhe Electronics and Guangzhou KingTeller Technology, you can compare the effects of market volatilities on Shijiazhuang Tonhe and Guangzhou KingTeller 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 Shijiazhuang Tonhe with a short position of Guangzhou KingTeller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shijiazhuang Tonhe and Guangzhou KingTeller.

Diversification Opportunities for Shijiazhuang Tonhe and Guangzhou KingTeller

0.13

Correlation Coefficient

Shijiazhuang Tonhe  Guangzhou KingTeller

Average diversification

The 3 months correlation between Shijiazhuang and Guangzhou is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shijiazhuang Tonhe Electronics and Guangzhou KingTeller Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou KingTeller and Shijiazhuang Tonhe 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 Shijiazhuang Tonhe Electronics are associated (or correlated) with Guangzhou KingTeller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou KingTeller has no effect on the direction of Shijiazhuang Tonhe i.e., Shijiazhuang Tonhe and Guangzhou KingTeller go up and down completely randomly.

Pair Corralation between Shijiazhuang Tonhe and Guangzhou KingTeller

Assuming the 90 days trading horizon Shijiazhuang Tonhe is expected to generate 1.18 times less return on investment than Guangzhou KingTeller. In addition to that, Shijiazhuang Tonhe is 1.1 times more volatile than Guangzhou KingTeller Technology. It trades about 0.05 of its total potential returns per unit of risk. Guangzhou KingTeller Technology is currently generating about 0.06 per unit of volatility. If you would invest  315.00  in Guangzhou KingTeller Technology on December 11, 2024 and sell it today you would earn a total of  173.00  from holding Guangzhou KingTeller Technology or generate 54.92% return on investment over 90 days.

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

Shijiazhuang Tonhe Electronics  vs.  Guangzhou KingTeller Technolog

Shijiazhuang Tonhe

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shijiazhuang Tonhe Electronics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shijiazhuang Tonhe sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou KingTeller

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou KingTeller Technology 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.

Pair Trading with Shijiazhuang Tonhe and Guangzhou KingTeller

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

The idea behind Shijiazhuang Tonhe Electronics and Guangzhou KingTeller Technology 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.