Correlation Between Kidswant Children and Rongcheer Industrial

Can any of the company-specific risk be diversified away by investing in both Kidswant Children and Rongcheer Industrial 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 Rongcheer Industrial 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 Rongcheer Industrial Technology, you can compare the effects of market volatilities on Kidswant Children and Rongcheer Industrial 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 Rongcheer Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kidswant Children and Rongcheer Industrial.

Diversification Opportunities for Kidswant Children and Rongcheer Industrial

0.52

Correlation Coefficient

Kidswant Children  Rongcheer Industrial

Very weak diversification

The 3 months correlation between Kidswant and Rongcheer is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kidswant Children Products and Rongcheer Industrial Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rongcheer Industrial 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 Rongcheer Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rongcheer Industrial has no effect on the direction of Kidswant Children i.e., Kidswant Children and Rongcheer Industrial go up and down completely randomly.

Pair Corralation between Kidswant Children and Rongcheer Industrial

Assuming the 90 days trading horizon Kidswant Children Products is expected to under-perform the Rongcheer Industrial. In addition to that, Kidswant Children is 1.16 times more volatile than Rongcheer Industrial Technology. It trades about -0.19 of its total potential returns per unit of risk. Rongcheer Industrial Technology is currently generating about -0.16 per unit of volatility. If you would invest  5,614  in Rongcheer Industrial Technology on October 10, 2024 and sell it today you would lose (676.00) from holding Rongcheer Industrial Technology or give up 12.04% of portfolio value over 90 days.

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

Kidswant Children Products  vs.  Rongcheer Industrial Technolog

Kidswant Children

Risk-Adjusted Performance

5 of 100

Weak

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.

Rongcheer Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rongcheer Industrial Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Rongcheer Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kidswant Children and Rongcheer Industrial

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

The idea behind Kidswant Children Products and Rongcheer Industrial Technology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.