Correlation Between Poly Real and Kweichow Moutai

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

By analyzing existing cross correlation between Poly Real Estate and Kweichow Moutai Co, you can compare the effects of market volatilities on Poly Real and Kweichow Moutai 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 Poly Real with a short position of Kweichow Moutai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poly Real and Kweichow Moutai.

Diversification Opportunities for Poly Real and Kweichow Moutai

0.34

Correlation Coefficient

Poly Real  Kweichow Moutai

Weak diversification

The 3 months correlation between Poly and Kweichow is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Poly Real Estate and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai and Poly Real 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 Poly Real Estate are associated (or correlated) with Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of Poly Real i.e., Poly Real and Kweichow Moutai go up and down completely randomly.

Pair Corralation between Poly Real and Kweichow Moutai

Assuming the 90 days trading horizon Poly Real Estate is expected to under-perform the Kweichow Moutai. In addition to that, Poly Real is 1.08 times more volatile than Kweichow Moutai Co. It trades about -0.06 of its total potential returns per unit of risk. Kweichow Moutai Co is currently generating about 0.05 per unit of volatility. If you would invest  152,500  in Kweichow Moutai Co on December 30, 2024 and sell it today you would earn a total of  6,021  from holding Kweichow Moutai Co or generate 3.95% return on investment over 90 days.

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

Poly Real Estate  vs.  Kweichow Moutai Co

Poly Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Poly Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Poly Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kweichow Moutai

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kweichow Moutai Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kweichow Moutai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Poly Real and Kweichow Moutai

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

The idea behind Poly Real Estate and Kweichow Moutai 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.