Correlation Between Kweichow Moutai and Digiwin Software

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

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

Diversification Opportunities for Kweichow Moutai and Digiwin Software

0.52

Correlation Coefficient

Kweichow Moutai  Digiwin Software

Very weak diversification

The 3 months correlation between Kweichow and Digiwin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kweichow Moutai Co and Digiwin Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digiwin Software and Kweichow Moutai 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 Kweichow Moutai Co are associated (or correlated) with Digiwin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digiwin Software has no effect on the direction of Kweichow Moutai i.e., Kweichow Moutai and Digiwin Software go up and down completely randomly.

Pair Corralation between Kweichow Moutai and Digiwin Software

Assuming the 90 days trading horizon Kweichow Moutai Co is expected to under-perform the Digiwin Software. But the stock apears to be less risky and, when comparing its historical volatility, Kweichow Moutai Co is 2.02 times less risky than Digiwin Software. The stock trades about -0.03 of its potential returns per unit of risk. The Digiwin Software Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,752  in Digiwin Software Co on September 24, 2024 and sell it today you would earn a total of  1,237  from holding Digiwin Software Co or generate 70.61% return on investment over 90 days.

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

Kweichow Moutai Co  vs.  Digiwin Software Co

Kweichow Moutai

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kweichow Moutai Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kweichow Moutai sustained solid returns over the last few months and may actually be approaching a breakup point.

Digiwin Software

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digiwin Software Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Digiwin Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kweichow Moutai and Digiwin Software

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

The idea behind Kweichow Moutai Co and Digiwin Software 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.