Correlation Between Keli Sensing and Guanghui Energy

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

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

Diversification Opportunities for Keli Sensing and Guanghui Energy

-0.77

Correlation Coefficient

Keli Sensing  Guanghui Energy

Pay attention - limited upside

The 3 months correlation between Keli and Guanghui is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Keli Sensing Technology and Guanghui Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guanghui Energy and Keli Sensing 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 Keli Sensing Technology are associated (or correlated) with Guanghui Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guanghui Energy has no effect on the direction of Keli Sensing i.e., Keli Sensing and Guanghui Energy go up and down completely randomly.

Pair Corralation between Keli Sensing and Guanghui Energy

Assuming the 90 days trading horizon Keli Sensing Technology is expected to generate 4.68 times more return on investment than Guanghui Energy. However, Keli Sensing is 4.68 times more volatile than Guanghui Energy Co. It trades about 0.25 of its potential returns per unit of risk. Guanghui Energy Co is currently generating about -0.4 per unit of risk. If you would invest  4,027  in Keli Sensing Technology on October 6, 2024 and sell it today you would earn a total of  2,735  from holding Keli Sensing Technology or generate 67.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Keli Sensing Technology  vs.  Guanghui Energy Co

Keli Sensing Technology

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Keli Sensing Technology are ranked lower than 18 (%) 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.

Guanghui Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guanghui Energy 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.

Pair Trading with Keli Sensing and Guanghui Energy

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

The idea behind Keli Sensing Technology and Guanghui Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.