Correlation Between KUAISHOU TECHNOLOGY and TRAVEL LEISURE

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

By analyzing existing cross correlation between KUAISHOU TECHNOLOGY CLB and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on KUAISHOU TECHNOLOGY and TRAVEL LEISURE 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 KUAISHOU TECHNOLOGY with a short position of TRAVEL LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KUAISHOU TECHNOLOGY and TRAVEL LEISURE.

Diversification Opportunities for KUAISHOU TECHNOLOGY and TRAVEL LEISURE

0.06

Correlation Coefficient

KUAISHOU TECHNOLOGY  TRAVEL LEISURE

Significant diversification

The 3 months correlation between KUAISHOU and TRAVEL is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KUAISHOU TECHNOLOGY CLB and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL and KUAISHOU 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 KUAISHOU TECHNOLOGY CLB are associated (or correlated) with TRAVEL LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of KUAISHOU TECHNOLOGY i.e., KUAISHOU TECHNOLOGY and TRAVEL LEISURE go up and down completely randomly.

Pair Corralation between KUAISHOU TECHNOLOGY and TRAVEL LEISURE

Assuming the 90 days horizon KUAISHOU TECHNOLOGY CLB is expected to under-perform the TRAVEL LEISURE. In addition to that, KUAISHOU TECHNOLOGY is 1.71 times more volatile than TRAVEL LEISURE DL 01. It trades about -0.17 of its total potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about -0.24 per unit of volatility. If you would invest  5,199  in TRAVEL LEISURE DL 01 on September 24, 2024 and sell it today you would lose (299.00) from holding TRAVEL LEISURE DL 01 or give up 5.75% of portfolio value over 90 days.

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

KUAISHOU TECHNOLOGY CLB  vs.  TRAVEL LEISURE DL 01

KUAISHOU TECHNOLOGY CLB

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KUAISHOU TECHNOLOGY CLB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KUAISHOU TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TRAVEL LEISURE DL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL LEISURE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KUAISHOU TECHNOLOGY and TRAVEL LEISURE

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

The idea behind KUAISHOU TECHNOLOGY CLB and TRAVEL LEISURE DL 01 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.