Correlation Between Keda Clean and Jiangsu GDK

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

By analyzing existing cross correlation between Keda Clean Energy and Jiangsu GDK Biotechnology, you can compare the effects of market volatilities on Keda Clean and Jiangsu GDK 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 Keda Clean with a short position of Jiangsu GDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keda Clean and Jiangsu GDK.

Diversification Opportunities for Keda Clean and Jiangsu GDK

0.18

Correlation Coefficient

Keda Clean  Jiangsu GDK

Average diversification

The 3 months correlation between Keda and Jiangsu is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Keda Clean Energy and Jiangsu GDK Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu GDK Biotechnology and Keda Clean 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 Keda Clean Energy are associated (or correlated) with Jiangsu GDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu GDK Biotechnology has no effect on the direction of Keda Clean i.e., Keda Clean and Jiangsu GDK go up and down completely randomly.

Pair Corralation between Keda Clean and Jiangsu GDK

Assuming the 90 days trading horizon Keda Clean Energy is expected to generate 0.59 times more return on investment than Jiangsu GDK. However, Keda Clean Energy is 1.68 times less risky than Jiangsu GDK. It trades about 0.08 of its potential returns per unit of risk. Jiangsu GDK Biotechnology is currently generating about -0.05 per unit of risk. If you would invest  782.00  in Keda Clean Energy on December 25, 2024 and sell it today you would earn a total of  47.00  from holding Keda Clean Energy or generate 6.01% return on investment over 90 days.

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

Keda Clean Energy  vs.  Jiangsu GDK Biotechnology

Keda Clean Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keda Clean Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Keda Clean may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Jiangsu GDK Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jiangsu GDK Biotechnology 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.

Pair Trading with Keda Clean and Jiangsu GDK

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

The idea behind Keda Clean Energy and Jiangsu GDK Biotechnology 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.