Correlation Between Zhongtong Guomai and Keli Sensing

Can any of the company-specific risk be diversified away by investing in both Zhongtong Guomai and Keli Sensing 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 Zhongtong Guomai and Keli Sensing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhongtong Guomai Communication and Keli Sensing Technology, you can compare the effects of market volatilities on Zhongtong Guomai and Keli Sensing 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 Zhongtong Guomai with a short position of Keli Sensing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongtong Guomai and Keli Sensing.

Diversification Opportunities for Zhongtong Guomai and Keli Sensing

-0.43

Correlation Coefficient

Zhongtong Guomai  Keli Sensing

Very good diversification

The 3 months correlation between Zhongtong and Keli is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Zhongtong Guomai Communication and Keli Sensing Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keli Sensing Technology and Zhongtong Guomai 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 Zhongtong Guomai Communication are associated (or correlated) with Keli Sensing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keli Sensing Technology has no effect on the direction of Zhongtong Guomai i.e., Zhongtong Guomai and Keli Sensing go up and down completely randomly.

Pair Corralation between Zhongtong Guomai and Keli Sensing

Assuming the 90 days trading horizon Zhongtong Guomai Communication is expected to under-perform the Keli Sensing. But the stock apears to be less risky and, when comparing its historical volatility, Zhongtong Guomai Communication is 1.05 times less risky than Keli Sensing. The stock trades about -0.07 of its potential returns per unit of risk. The Keli Sensing Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5,360  in Keli Sensing Technology on December 1, 2024 and sell it today you would earn a total of  2,553  from holding Keli Sensing Technology or generate 47.63% return on investment over 90 days.

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

Zhongtong Guomai Communication  vs.  Keli Sensing Technology

Zhongtong Guomai Com

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zhongtong Guomai Communication 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Keli Sensing Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Keli Sensing Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Keli Sensing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongtong Guomai and Keli Sensing

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

The idea behind Zhongtong Guomai Communication and Keli Sensing 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.