Correlation Between Kunwu Jiuding and China National

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

By analyzing existing cross correlation between Kunwu Jiuding Investment and China National Medicines, you can compare the effects of market volatilities on Kunwu Jiuding and China National 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 Kunwu Jiuding with a short position of China National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kunwu Jiuding and China National.

Diversification Opportunities for Kunwu Jiuding and China National

-0.1

Correlation Coefficient

Kunwu Jiuding  China National

Good diversification

The 3 months correlation between Kunwu and China is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kunwu Jiuding Investment and China National Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Medicines and Kunwu Jiuding 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 Kunwu Jiuding Investment are associated (or correlated) with China National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Medicines has no effect on the direction of Kunwu Jiuding i.e., Kunwu Jiuding and China National go up and down completely randomly.

Pair Corralation between Kunwu Jiuding and China National

Assuming the 90 days trading horizon Kunwu Jiuding Investment is expected to generate 2.16 times more return on investment than China National. However, Kunwu Jiuding is 2.16 times more volatile than China National Medicines. It trades about -0.04 of its potential returns per unit of risk. China National Medicines is currently generating about -0.17 per unit of risk. If you would invest  1,442  in Kunwu Jiuding Investment on December 25, 2024 and sell it today you would lose (125.00) from holding Kunwu Jiuding Investment or give up 8.67% of portfolio value over 90 days.

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

Kunwu Jiuding Investment  vs.  China National Medicines

Kunwu Jiuding Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kunwu Jiuding Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

China National Medicines

Risk-Adjusted Performance

Very Weak

Over the last 90 days China National Medicines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kunwu Jiuding and China National

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

The idea behind Kunwu Jiuding Investment and China National Medicines 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.