Correlation Between HUAQIN TECHNOLOGY and INKON Life

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

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

Diversification Opportunities for HUAQIN TECHNOLOGY and INKON Life

0.71

Correlation Coefficient

HUAQIN TECHNOLOGY  INKON Life

Poor diversification

The 3 months correlation between HUAQIN and INKON is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding HUAQIN TECHNOLOGY LTD and INKON Life Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INKON Life Technology and HUAQIN TECHNOLOGY 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 HUAQIN TECHNOLOGY LTD are associated (or correlated) with INKON Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INKON Life Technology has no effect on the direction of HUAQIN TECHNOLOGY i.e., HUAQIN TECHNOLOGY and INKON Life go up and down completely randomly.

Pair Corralation between HUAQIN TECHNOLOGY and INKON Life

Assuming the 90 days trading horizon HUAQIN TECHNOLOGY is expected to generate 2.38 times less return on investment than INKON Life. In addition to that, HUAQIN TECHNOLOGY is 1.43 times more volatile than INKON Life Technology. It trades about 0.03 of its total potential returns per unit of risk. INKON Life Technology is currently generating about 0.09 per unit of volatility. If you would invest  942.00  in INKON Life Technology on December 30, 2024 and sell it today you would earn a total of  114.00  from holding INKON Life Technology or generate 12.1% return on investment over 90 days.

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

HUAQIN TECHNOLOGY LTD  vs.  INKON Life Technology

HUAQIN TECHNOLOGY LTD

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUAQIN TECHNOLOGY LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUAQIN TECHNOLOGY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

INKON Life Technology

Risk-Adjusted Performance

OK

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

Pair Trading with HUAQIN TECHNOLOGY and INKON Life

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

The idea behind HUAQIN TECHNOLOGY LTD and INKON Life 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 Transaction History module to view history of all your transactions and understand their impact on performance.