Correlation Between Keeson Technology and Ningxia Building

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

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

Diversification Opportunities for Keeson Technology and Ningxia Building

0.59

Correlation Coefficient

Keeson Technology  Ningxia Building

Very weak diversification

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

Pair Corralation between Keeson Technology and Ningxia Building

Assuming the 90 days trading horizon Keeson Technology Corp is expected to generate 0.89 times more return on investment than Ningxia Building. However, Keeson Technology Corp is 1.12 times less risky than Ningxia Building. It trades about 0.01 of its potential returns per unit of risk. Ningxia Building Materials is currently generating about 0.0 per unit of risk. 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Keeson Technology Corp  vs.  Ningxia Building Materials

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.

Ningxia Building Mat

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Building Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningxia Building may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Keeson Technology and Ningxia Building

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

The idea behind Keeson Technology Corp and Ningxia Building Materials 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 CEOs Directory module to screen CEOs from public companies around the world.