Correlation Between China Life and Kingsignal Technology

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

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

Diversification Opportunities for China Life and Kingsignal Technology

0.22

Correlation Coefficient

China Life  Kingsignal Technology

Modest diversification

The 3 months correlation between China and Kingsignal is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Kingsignal Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsignal Technology and China Life 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 China Life Insurance are associated (or correlated) with Kingsignal Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsignal Technology has no effect on the direction of China Life i.e., China Life and Kingsignal Technology go up and down completely randomly.

Pair Corralation between China Life and Kingsignal Technology

Assuming the 90 days trading horizon China Life is expected to generate 2.05 times less return on investment than Kingsignal Technology. But when comparing it to its historical volatility, China Life Insurance is 2.05 times less risky than Kingsignal Technology. It trades about 0.03 of its potential returns per unit of risk. Kingsignal Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  808.00  in Kingsignal Technology Co on October 26, 2024 and sell it today you would earn a total of  188.00  from holding Kingsignal Technology Co or generate 23.27% return on investment over 90 days.

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

China Life Insurance  vs.  Kingsignal Technology Co

China Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kingsignal Technology

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with China Life and Kingsignal Technology

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

The idea behind China Life Insurance and Kingsignal 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.