Correlation Between Kweichow Moutai and Contemporary Amperex

Can any of the company-specific risk be diversified away by investing in both Kweichow Moutai and Contemporary Amperex 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 Contemporary Amperex 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 Contemporary Amperex Technology, you can compare the effects of market volatilities on Kweichow Moutai and Contemporary Amperex 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 Contemporary Amperex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kweichow Moutai and Contemporary Amperex.

Diversification Opportunities for Kweichow Moutai and Contemporary Amperex

0.56

Correlation Coefficient

Kweichow Moutai  Contemporary Amperex

Very weak diversification

The 3 months correlation between Kweichow and Contemporary is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kweichow Moutai Co and Contemporary Amperex Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contemporary Amperex 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 Contemporary Amperex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contemporary Amperex has no effect on the direction of Kweichow Moutai i.e., Kweichow Moutai and Contemporary Amperex go up and down completely randomly.

Pair Corralation between Kweichow Moutai and Contemporary Amperex

Assuming the 90 days trading horizon Kweichow Moutai Co is expected to under-perform the Contemporary Amperex. But the stock apears to be less risky and, when comparing its historical volatility, Kweichow Moutai Co is 1.63 times less risky than Contemporary Amperex. The stock trades about -0.05 of its potential returns per unit of risk. The Contemporary Amperex Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  25,348  in Contemporary Amperex Technology on November 28, 2024 and sell it today you would earn a total of  1,514  from holding Contemporary Amperex Technology or generate 5.97% 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.  Contemporary Amperex Technolog

Kweichow Moutai

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kweichow Moutai Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Contemporary Amperex

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Contemporary Amperex Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Contemporary Amperex may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Kweichow Moutai and Contemporary Amperex

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

The idea behind Kweichow Moutai Co and Contemporary Amperex Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.