Correlation Between KSEC Intelligent and Gansu Jiu

Can any of the company-specific risk be diversified away by investing in both KSEC Intelligent and Gansu Jiu 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 KSEC Intelligent and Gansu Jiu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KSEC Intelligent Technology and Gansu Jiu Steel, you can compare the effects of market volatilities on KSEC Intelligent and Gansu Jiu 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 KSEC Intelligent with a short position of Gansu Jiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSEC Intelligent and Gansu Jiu.

Diversification Opportunities for KSEC Intelligent and Gansu Jiu

0.55

Correlation Coefficient

KSEC Intelligent  Gansu Jiu

Very weak diversification

The 3 months correlation between KSEC and Gansu is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KSEC Intelligent Technology and Gansu Jiu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Jiu Steel and KSEC Intelligent 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 KSEC Intelligent Technology are associated (or correlated) with Gansu Jiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Jiu Steel has no effect on the direction of KSEC Intelligent i.e., KSEC Intelligent and Gansu Jiu go up and down completely randomly.

Pair Corralation between KSEC Intelligent and Gansu Jiu

Assuming the 90 days trading horizon KSEC Intelligent Technology is expected to under-perform the Gansu Jiu. But the stock apears to be less risky and, when comparing its historical volatility, KSEC Intelligent Technology is 1.51 times less risky than Gansu Jiu. The stock trades about -0.12 of its potential returns per unit of risk. The Gansu Jiu Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  139.00  in Gansu Jiu Steel on October 22, 2024 and sell it today you would earn a total of  11.00  from holding Gansu Jiu Steel or generate 7.91% return on investment over 90 days.

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

KSEC Intelligent Technology  vs.  Gansu Jiu Steel

KSEC Intelligent Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KSEC Intelligent Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gansu Jiu Steel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Jiu Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gansu Jiu may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with KSEC Intelligent and Gansu Jiu

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

The idea behind KSEC Intelligent Technology and Gansu Jiu Steel 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.