Correlation Between Malion New and Kuangda Technology

Can any of the company-specific risk be diversified away by investing in both Malion New and Kuangda Technology 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 Malion New and Kuangda Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Malion New Materials and Kuangda Technology Group, you can compare the effects of market volatilities on Malion New and Kuangda Technology 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 Malion New with a short position of Kuangda Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malion New and Kuangda Technology.

Diversification Opportunities for Malion New and Kuangda Technology

0.66

Correlation Coefficient

Malion New  Kuangda Technology

Poor diversification

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

Pair Corralation between Malion New and Kuangda Technology

Assuming the 90 days trading horizon Malion New Materials is expected to generate 1.3 times more return on investment than Kuangda Technology. However, Malion New is 1.3 times more volatile than Kuangda Technology Group. It trades about 0.02 of its potential returns per unit of risk. Kuangda Technology Group is currently generating about -0.05 per unit of risk. If you would invest  818.00  in Malion New Materials on October 25, 2024 and sell it today you would lose (6.00) from holding Malion New Materials or give up 0.73% of portfolio value over 90 days.

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

Malion New Materials  vs.  Kuangda Technology Group

Malion New Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Malion New Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Malion New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kuangda Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuangda Technology Group 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 Malion New and Kuangda Technology

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

The idea behind Malion New Materials and Kuangda Technology Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.