Correlation Between Shenzhen Kexin and CICT Mobile

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

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

Diversification Opportunities for Shenzhen Kexin and CICT Mobile

0.78

Correlation Coefficient

Shenzhen Kexin  CICT Mobile

Poor diversification

The 3 months correlation between Shenzhen and CICT is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Kexin Communication and CICT Mobile Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CICT Mobile Communication and Shenzhen Kexin 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 Shenzhen Kexin Communication are associated (or correlated) with CICT Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CICT Mobile Communication has no effect on the direction of Shenzhen Kexin i.e., Shenzhen Kexin and CICT Mobile go up and down completely randomly.

Pair Corralation between Shenzhen Kexin and CICT Mobile

Assuming the 90 days trading horizon Shenzhen Kexin Communication is expected to generate 1.7 times more return on investment than CICT Mobile. However, Shenzhen Kexin is 1.7 times more volatile than CICT Mobile Communication. It trades about -0.04 of its potential returns per unit of risk. CICT Mobile Communication is currently generating about -0.09 per unit of risk. If you would invest  1,379  in Shenzhen Kexin Communication on December 1, 2024 and sell it today you would lose (141.00) from holding Shenzhen Kexin Communication or give up 10.22% of portfolio value over 90 days.

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

Shenzhen Kexin Communication  vs.  CICT Mobile Communication

Shenzhen Kexin Commu

Risk-Adjusted Performance

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 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.

CICT Mobile Communication

Risk-Adjusted Performance

Very Weak

Over the last 90 days CICT Mobile Communication 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 Shenzhen Kexin and CICT Mobile

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

The idea behind Shenzhen Kexin Communication and CICT Mobile 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.