Correlation Between Adata Technology and K Way

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

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

Diversification Opportunities for Adata Technology and K Way

-0.19

Correlation Coefficient

Adata Technology  K Way

Good diversification

The 3 months correlation between Adata and 5201 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Adata Technology Co and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and Adata 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 Adata Technology Co are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of Adata Technology i.e., Adata Technology and K Way go up and down completely randomly.

Pair Corralation between Adata Technology and K Way

Assuming the 90 days trading horizon Adata Technology Co is expected to under-perform the K Way. But the stock apears to be less risky and, when comparing its historical volatility, Adata Technology Co is 1.34 times less risky than K Way. The stock trades about -0.11 of its potential returns per unit of risk. The K Way Information is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,815  in K Way Information on September 13, 2024 and sell it today you would earn a total of  20.00  from holding K Way Information or generate 0.71% return on investment over 90 days.

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

Adata Technology Co  vs.  K Way Information

Adata Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adata Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

K Way Information

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in K Way Information are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, K Way 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 Adata Technology and K Way

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

The idea behind Adata Technology Co and K Way Information 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.