Correlation Between Shanghai Shibei and Kuangda Technology

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

By analyzing existing cross correlation between Shanghai Shibei Hi Tech and Kuangda Technology Group, you can compare the effects of market volatilities on Shanghai Shibei and Kuangda 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 Shanghai Shibei with a short position of Kuangda Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Shibei and Kuangda Technology.

Diversification Opportunities for Shanghai Shibei and Kuangda Technology

0.67

Correlation Coefficient

Shanghai Shibei  Kuangda Technology

Poor diversification

The 3 months correlation between Shanghai and Kuangda is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Shibei Hi Tech and Kuangda Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuangda Technology and Shanghai Shibei 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 Shanghai Shibei Hi Tech are associated (or correlated) with Kuangda Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuangda Technology has no effect on the direction of Shanghai Shibei i.e., Shanghai Shibei and Kuangda Technology go up and down completely randomly.

Pair Corralation between Shanghai Shibei and Kuangda Technology

Assuming the 90 days trading horizon Shanghai Shibei is expected to generate 15.69 times less return on investment than Kuangda Technology. In addition to that, Shanghai Shibei is 1.08 times more volatile than Kuangda Technology Group. It trades about 0.0 of its total potential returns per unit of risk. Kuangda Technology Group is currently generating about 0.01 per unit of volatility. If you would invest  504.00  in Kuangda Technology Group on October 11, 2024 and sell it today you would lose (17.00) from holding Kuangda Technology Group or give up 3.37% of portfolio value over 90 days.

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

Shanghai Shibei Hi Tech  vs.  Kuangda Technology Group

Shanghai Shibei Hi

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Shibei Hi Tech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai Shibei may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kuangda Technology

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Shanghai Shibei and Kuangda Technology

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

The idea behind Shanghai Shibei Hi Tech and Kuangda Technology Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.