Correlation Between Chien Kuo and Sysgration

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

By analyzing existing cross correlation between Chien Kuo Construction and Sysgration, you can compare the effects of market volatilities on Chien Kuo and Sysgration 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 Chien Kuo with a short position of Sysgration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chien Kuo and Sysgration.

Diversification Opportunities for Chien Kuo and Sysgration

0.3

Correlation Coefficient

Chien Kuo  Sysgration

Weak diversification

The 3 months correlation between Chien and Sysgration is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chien Kuo Construction and Sysgration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysgration and Chien Kuo 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 Chien Kuo Construction are associated (or correlated) with Sysgration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysgration has no effect on the direction of Chien Kuo i.e., Chien Kuo and Sysgration go up and down completely randomly.

Pair Corralation between Chien Kuo and Sysgration

Assuming the 90 days trading horizon Chien Kuo Construction is expected to generate 0.68 times more return on investment than Sysgration. However, Chien Kuo Construction is 1.46 times less risky than Sysgration. It trades about 0.25 of its potential returns per unit of risk. Sysgration is currently generating about -0.02 per unit of risk. If you would invest  2,645  in Chien Kuo Construction on December 25, 2024 and sell it today you would earn a total of  590.00  from holding Chien Kuo Construction or generate 22.31% return on investment over 90 days.

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

Chien Kuo Construction  vs.  Sysgration

Chien Kuo Construction

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chien Kuo Construction are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chien Kuo showed solid returns over the last few months and may actually be approaching a breakup point.

Sysgration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sysgration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sysgration 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 Chien Kuo and Sysgration

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

The idea behind Chien Kuo Construction and Sysgration 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..