Correlation Between Konfoong Materials and Shenzhen SDG

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

By analyzing existing cross correlation between Konfoong Materials International and Shenzhen SDG Information, you can compare the effects of market volatilities on Konfoong Materials and Shenzhen SDG 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 Konfoong Materials with a short position of Shenzhen SDG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Konfoong Materials and Shenzhen SDG.

Diversification Opportunities for Konfoong Materials and Shenzhen SDG

0.81

Correlation Coefficient

Konfoong Materials  Shenzhen SDG

Very poor diversification

The 3 months correlation between Konfoong and Shenzhen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Konfoong Materials Internation and Shenzhen SDG Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen SDG Information and Konfoong Materials 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 Konfoong Materials International are associated (or correlated) with Shenzhen SDG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen SDG Information has no effect on the direction of Konfoong Materials i.e., Konfoong Materials and Shenzhen SDG go up and down completely randomly.

Pair Corralation between Konfoong Materials and Shenzhen SDG

Assuming the 90 days trading horizon Konfoong Materials International is expected to under-perform the Shenzhen SDG. In addition to that, Konfoong Materials is 1.22 times more volatile than Shenzhen SDG Information. It trades about -0.24 of its total potential returns per unit of risk. Shenzhen SDG Information is currently generating about -0.28 per unit of volatility. If you would invest  608.00  in Shenzhen SDG Information on October 11, 2024 and sell it today you would lose (69.00) from holding Shenzhen SDG Information or give up 11.35% of portfolio value over 90 days.

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

Konfoong Materials Internation  vs.  Shenzhen SDG Information

Konfoong Materials

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Konfoong Materials International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Konfoong Materials sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen SDG Information

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen SDG Information are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen SDG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Konfoong Materials and Shenzhen SDG

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

The idea behind Konfoong Materials International and Shenzhen SDG Information 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..