Correlation Between Duzhe Publishing and Kuangda Technology

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

By analyzing existing cross correlation between Duzhe Publishing Media and Kuangda Technology Group, you can compare the effects of market volatilities on Duzhe Publishing and Kuangda Technology 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 Duzhe Publishing with a short position of Kuangda Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duzhe Publishing and Kuangda Technology.

Diversification Opportunities for Duzhe Publishing and Kuangda Technology

0.7

Correlation Coefficient

Duzhe Publishing  Kuangda Technology

Poor diversification

The 3 months correlation between Duzhe and Kuangda is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Duzhe Publishing Media and Kuangda Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuangda Technology and Duzhe Publishing 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 Duzhe Publishing Media are associated (or correlated) with Kuangda Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuangda Technology has no effect on the direction of Duzhe Publishing i.e., Duzhe Publishing and Kuangda Technology go up and down completely randomly.

Pair Corralation between Duzhe Publishing and Kuangda Technology

Assuming the 90 days trading horizon Duzhe Publishing is expected to generate 1.25 times less return on investment than Kuangda Technology. But when comparing it to its historical volatility, Duzhe Publishing Media is 1.1 times less risky than Kuangda Technology. It trades about 0.04 of its potential returns per unit of risk. Kuangda Technology Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  462.00  in Kuangda Technology Group on October 9, 2024 and sell it today you would earn a total of  27.00  from holding Kuangda Technology Group or generate 5.84% return on investment over 90 days.

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

Duzhe Publishing Media  vs.  Kuangda Technology Group

Duzhe Publishing Media

Risk-Adjusted Performance

2 of 100

Weak

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

Kuangda Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kuangda Technology Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kuangda Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Duzhe Publishing and Kuangda Technology

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

The idea behind Duzhe Publishing Media and Kuangda Technology Group 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.