Correlation Between Hubei Geoway and Kangyue Technology

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

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

Diversification Opportunities for Hubei Geoway and Kangyue Technology

0.53

Correlation Coefficient

Hubei Geoway  Kangyue Technology

Very weak diversification

The 3 months correlation between Hubei and Kangyue is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Geoway Investment and Kangyue Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kangyue Technology and Hubei Geoway 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 Hubei Geoway Investment are associated (or correlated) with Kangyue Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kangyue Technology has no effect on the direction of Hubei Geoway i.e., Hubei Geoway and Kangyue Technology go up and down completely randomly.

Pair Corralation between Hubei Geoway and Kangyue Technology

Assuming the 90 days trading horizon Hubei Geoway Investment is expected to generate 0.73 times more return on investment than Kangyue Technology. However, Hubei Geoway Investment is 1.36 times less risky than Kangyue Technology. It trades about -0.04 of its potential returns per unit of risk. Kangyue Technology Co is currently generating about -0.05 per unit of risk. If you would invest  155.00  in Hubei Geoway Investment on December 4, 2024 and sell it today you would lose (17.00) from holding Hubei Geoway Investment or give up 10.97% of portfolio value over 90 days.

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

Hubei Geoway Investment  vs.  Kangyue Technology Co

Hubei Geoway Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hubei Geoway 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.

Kangyue Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kangyue Technology Co 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 Hubei Geoway and Kangyue Technology

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

The idea behind Hubei Geoway Investment and Kangyue Technology 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.