Correlation Between Kidswant Children and Guilin Seamild

Can any of the company-specific risk be diversified away by investing in both Kidswant Children and Guilin Seamild 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 Kidswant Children and Guilin Seamild into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kidswant Children Products and Guilin Seamild Foods, you can compare the effects of market volatilities on Kidswant Children and Guilin Seamild 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 Kidswant Children with a short position of Guilin Seamild. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kidswant Children and Guilin Seamild.

Diversification Opportunities for Kidswant Children and Guilin Seamild

0.31

Correlation Coefficient

Kidswant Children  Guilin Seamild

Weak diversification

The 3 months correlation between Kidswant and Guilin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kidswant Children Products and Guilin Seamild Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guilin Seamild Foods and Kidswant Children 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 Kidswant Children Products are associated (or correlated) with Guilin Seamild. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guilin Seamild Foods has no effect on the direction of Kidswant Children i.e., Kidswant Children and Guilin Seamild go up and down completely randomly.

Pair Corralation between Kidswant Children and Guilin Seamild

Assuming the 90 days trading horizon Kidswant Children is expected to generate 1.14 times less return on investment than Guilin Seamild. In addition to that, Kidswant Children is 1.66 times more volatile than Guilin Seamild Foods. It trades about 0.07 of its total potential returns per unit of risk. Guilin Seamild Foods is currently generating about 0.12 per unit of volatility. If you would invest  1,286  in Guilin Seamild Foods on October 10, 2024 and sell it today you would earn a total of  279.00  from holding Guilin Seamild Foods or generate 21.7% return on investment over 90 days.

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

Kidswant Children Products  vs.  Guilin Seamild Foods

Kidswant Children

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kidswant Children Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kidswant Children sustained solid returns over the last few months and may actually be approaching a breakup point.

Guilin Seamild Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guilin Seamild Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guilin Seamild sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kidswant Children and Guilin Seamild

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

The idea behind Kidswant Children Products and Guilin Seamild Foods 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.