Correlation Between KSEC Intelligent and Hubei Geoway

Can any of the company-specific risk be diversified away by investing in both KSEC Intelligent and Hubei Geoway 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 Hubei Geoway 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 Hubei Geoway Investment, you can compare the effects of market volatilities on KSEC Intelligent and Hubei Geoway 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 Hubei Geoway. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSEC Intelligent and Hubei Geoway.

Diversification Opportunities for KSEC Intelligent and Hubei Geoway

0.17

Correlation Coefficient

KSEC Intelligent  Hubei Geoway

Average diversification

The 3 months correlation between KSEC and Hubei is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding KSEC Intelligent Technology and Hubei Geoway Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Geoway Investment 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 Hubei Geoway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Geoway Investment has no effect on the direction of KSEC Intelligent i.e., KSEC Intelligent and Hubei Geoway go up and down completely randomly.

Pair Corralation between KSEC Intelligent and Hubei Geoway

Assuming the 90 days trading horizon KSEC Intelligent Technology is expected to generate 1.38 times more return on investment than Hubei Geoway. However, KSEC Intelligent is 1.38 times more volatile than Hubei Geoway Investment. It trades about 0.01 of its potential returns per unit of risk. Hubei Geoway Investment is currently generating about -0.01 per unit of risk. If you would invest  2,170  in KSEC Intelligent Technology on October 25, 2024 and sell it today you would lose (426.00) from holding KSEC Intelligent Technology or give up 19.63% of portfolio value over 90 days.

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

KSEC Intelligent Technology  vs.  Hubei Geoway Investment

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.

Hubei Geoway Investment

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with KSEC Intelligent and Hubei Geoway

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

The idea behind KSEC Intelligent Technology and Hubei Geoway Investment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.