Correlation Between Kangping Technology and Kingclean Electric

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

By analyzing existing cross correlation between Kangping Technology Co and Kingclean Electric Co, you can compare the effects of market volatilities on Kangping Technology and Kingclean Electric 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 Kangping Technology with a short position of Kingclean Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kangping Technology and Kingclean Electric.

Diversification Opportunities for Kangping Technology and Kingclean Electric

0.23

Correlation Coefficient

Kangping Technology  Kingclean Electric

Modest diversification

The 3 months correlation between Kangping and Kingclean is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kangping Technology Co and Kingclean Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingclean Electric and Kangping 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 Kangping Technology Co are associated (or correlated) with Kingclean Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingclean Electric has no effect on the direction of Kangping Technology i.e., Kangping Technology and Kingclean Electric go up and down completely randomly.

Pair Corralation between Kangping Technology and Kingclean Electric

Assuming the 90 days trading horizon Kangping Technology Co is expected to generate 1.44 times more return on investment than Kingclean Electric. However, Kangping Technology is 1.44 times more volatile than Kingclean Electric Co. It trades about 0.03 of its potential returns per unit of risk. Kingclean Electric Co is currently generating about -0.02 per unit of risk. If you would invest  1,787  in Kangping Technology Co on October 4, 2024 and sell it today you would earn a total of  317.00  from holding Kangping Technology Co or generate 17.74% return on investment over 90 days.

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

Kangping Technology Co  vs.  Kingclean Electric Co

Kangping Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kangping Technology Co 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.

Kingclean Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingclean Electric Co 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 Kangping Technology and Kingclean Electric

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

The idea behind Kangping Technology Co and Kingclean Electric Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.