Correlation Between Keli Sensing and Tianjin Capital

Can any of the company-specific risk be diversified away by investing in both Keli Sensing and Tianjin Capital 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 Tianjin Capital 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 Tianjin Capital Environmental, you can compare the effects of market volatilities on Keli Sensing and Tianjin Capital 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 Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keli Sensing and Tianjin Capital.

Diversification Opportunities for Keli Sensing and Tianjin Capital

-0.4

Correlation Coefficient

Keli Sensing  Tianjin Capital

Very good diversification

The 3 months correlation between Keli and Tianjin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Keli Sensing Technology and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Keli Sensing i.e., Keli Sensing and Tianjin Capital go up and down completely randomly.

Pair Corralation between Keli Sensing and Tianjin Capital

Assuming the 90 days trading horizon Keli Sensing Technology is expected to generate 4.53 times more return on investment than Tianjin Capital. However, Keli Sensing is 4.53 times more volatile than Tianjin Capital Environmental. It trades about 0.02 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about -0.05 per unit of risk. If you would invest  6,721  in Keli Sensing Technology on December 30, 2024 and sell it today you would lose (22.00) from holding Keli Sensing Technology or give up 0.33% of portfolio value over 90 days.

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

Keli Sensing Technology  vs.  Tianjin Capital Environmental

Keli Sensing Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keli Sensing Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Keli Sensing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tianjin Capital Envi

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Keli Sensing and Tianjin Capital

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

The idea behind Keli Sensing Technology and Tianjin Capital Environmental 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.