Correlation Between Gome Telecom and Keeson Technology

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

By analyzing existing cross correlation between Gome Telecom Equipment and Keeson Technology Corp, you can compare the effects of market volatilities on Gome Telecom and Keeson 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 Gome Telecom with a short position of Keeson Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gome Telecom and Keeson Technology.

Diversification Opportunities for Gome Telecom and Keeson Technology

-0.59

Correlation Coefficient

Gome Telecom  Keeson Technology

Excellent diversification

The 3 months correlation between Gome and Keeson is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gome Telecom Equipment and Keeson Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeson Technology Corp and Gome Telecom 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 Gome Telecom Equipment are associated (or correlated) with Keeson Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keeson Technology Corp has no effect on the direction of Gome Telecom i.e., Gome Telecom and Keeson Technology go up and down completely randomly.

Pair Corralation between Gome Telecom and Keeson Technology

Assuming the 90 days trading horizon Gome Telecom Equipment is expected to under-perform the Keeson Technology. In addition to that, Gome Telecom is 1.18 times more volatile than Keeson Technology Corp. It trades about -0.1 of its total potential returns per unit of risk. Keeson Technology Corp is currently generating about 0.01 per unit of volatility. If you would invest  1,195  in Keeson Technology Corp on October 5, 2024 and sell it today you would lose (67.00) from holding Keeson Technology Corp or give up 5.61% of portfolio value over 90 days.

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

Gome Telecom Equipment  vs.  Keeson Technology Corp

Gome Telecom Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gome Telecom Equipment 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Keeson Technology Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keeson Technology Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Keeson Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gome Telecom and Keeson Technology

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

The idea behind Gome Telecom Equipment and Keeson Technology Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..