Correlation Between CITIC Metal and Kangyue Technology

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

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

Diversification Opportunities for CITIC Metal and Kangyue Technology

0.7

Correlation Coefficient

CITIC Metal  Kangyue Technology

Poor diversification

The 3 months correlation between CITIC and Kangyue is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Kangyue Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kangyue Technology and CITIC Metal 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 CITIC Metal Co are associated (or correlated) with Kangyue Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kangyue Technology has no effect on the direction of CITIC Metal i.e., CITIC Metal and Kangyue Technology go up and down completely randomly.

Pair Corralation between CITIC Metal and Kangyue Technology

Assuming the 90 days trading horizon CITIC Metal Co is expected to under-perform the Kangyue Technology. But the stock apears to be less risky and, when comparing its historical volatility, CITIC Metal Co is 2.03 times less risky than Kangyue Technology. The stock trades about -0.03 of its potential returns per unit of risk. The Kangyue Technology Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  950.00  in Kangyue Technology Co on October 4, 2024 and sell it today you would lose (446.00) from holding Kangyue Technology Co or give up 46.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.47%
Values	Daily Returns

CITIC Metal Co  vs.  Kangyue Technology Co

CITIC Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Metal Co 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.

Kangyue Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kangyue Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kangyue Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CITIC Metal and Kangyue Technology

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

The idea behind CITIC Metal Co and Kangyue Technology 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.