Correlation Between Alltek Technology and Weikeng Industrial

Can any of the company-specific risk be diversified away by investing in both Alltek Technology and Weikeng 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 Alltek Technology and Weikeng Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alltek Technology Corp and Weikeng Industrial Co, you can compare the effects of market volatilities on Alltek Technology and Weikeng 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 Alltek Technology with a short position of Weikeng Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alltek Technology and Weikeng Industrial.

Diversification Opportunities for Alltek Technology and Weikeng Industrial

0.67

Correlation Coefficient

Alltek Technology  Weikeng Industrial

Poor diversification

The 3 months correlation between Alltek and Weikeng is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alltek Technology Corp and Weikeng Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weikeng Industrial and Alltek Technology 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 Alltek Technology Corp are associated (or correlated) with Weikeng Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weikeng Industrial has no effect on the direction of Alltek Technology i.e., Alltek Technology and Weikeng Industrial go up and down completely randomly.

Pair Corralation between Alltek Technology and Weikeng Industrial

Assuming the 90 days trading horizon Alltek Technology Corp is expected to under-perform the Weikeng Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Alltek Technology Corp is 1.01 times less risky than Weikeng Industrial. The stock trades about -0.29 of its potential returns per unit of risk. The Weikeng Industrial Co is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  3,485  in Weikeng Industrial Co on October 9, 2024 and sell it today you would lose (95.00) from holding Weikeng Industrial Co or give up 2.73% of portfolio value over 90 days.

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

Alltek Technology Corp  vs.  Weikeng Industrial Co

Alltek Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alltek Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Weikeng Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weikeng Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Weikeng Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Alltek Technology and Weikeng Industrial

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

The idea behind Alltek Technology Corp and Weikeng Industrial Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.