Correlation Between Shanghai Action and Kingsignal Technology

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

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

Diversification Opportunities for Shanghai Action and Kingsignal Technology

0.43

Correlation Coefficient

Shanghai Action  Kingsignal Technology

Very weak diversification

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

Pair Corralation between Shanghai Action and Kingsignal Technology

Assuming the 90 days trading horizon Shanghai Action is expected to generate 31.04 times less return on investment than Kingsignal Technology. But when comparing it to its historical volatility, Shanghai Action Education is 1.58 times less risky than Kingsignal Technology. It trades about 0.0 of its potential returns per unit of risk. Kingsignal Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  912.00  in Kingsignal Technology Co on September 25, 2024 and sell it today you would earn a total of  85.00  from holding Kingsignal Technology Co or generate 9.32% return on investment over 90 days.

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

Shanghai Action Education  vs.  Kingsignal Technology Co

Shanghai Action Education

Risk-Adjusted Performance

1 of 100

Weak

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

Kingsignal Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsignal Technology Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kingsignal Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shanghai Action and Kingsignal Technology

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

The idea behind Shanghai Action Education and Kingsignal Technology 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .