Correlation Between KSEC Intelligent and Shenzhen Transsion

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

Diversification Opportunities for KSEC Intelligent and Shenzhen Transsion

0.53

Correlation Coefficient

KSEC Intelligent  Shenzhen Transsion

Very weak diversification

The 3 months correlation between KSEC and Shenzhen is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding KSEC Intelligent Technology and Shenzhen Transsion Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Transsion 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 Shenzhen Transsion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Transsion has no effect on the direction of KSEC Intelligent i.e., KSEC Intelligent and Shenzhen Transsion go up and down completely randomly.

Pair Corralation between KSEC Intelligent and Shenzhen Transsion

Assuming the 90 days trading horizon KSEC Intelligent Technology is expected to under-perform the Shenzhen Transsion. But the stock apears to be less risky and, when comparing its historical volatility, KSEC Intelligent Technology is 1.02 times less risky than Shenzhen Transsion. The stock trades about -0.42 of its potential returns per unit of risk. The Shenzhen Transsion Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  8,997  in Shenzhen Transsion Holdings on October 15, 2024 and sell it today you would lose (207.00) from holding Shenzhen Transsion Holdings or give up 2.3% of portfolio value over 90 days.

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

KSEC Intelligent Technology  vs.  Shenzhen Transsion Holdings

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.

Shenzhen Transsion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Transsion Holdings 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 KSEC Intelligent and Shenzhen Transsion

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

The idea behind KSEC Intelligent Technology and Shenzhen Transsion Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.