Correlation Between JuneYao Dairy and Kangyue Technology

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

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

Diversification Opportunities for JuneYao Dairy and Kangyue Technology

0.47

Correlation Coefficient

JuneYao Dairy  Kangyue Technology

Very weak diversification

The 3 months correlation between JuneYao and Kangyue is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding JuneYao Dairy Co and Kangyue Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kangyue Technology and JuneYao Dairy 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 JuneYao Dairy Co are associated (or correlated) with Kangyue Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kangyue Technology has no effect on the direction of JuneYao Dairy i.e., JuneYao Dairy and Kangyue Technology go up and down completely randomly.

Pair Corralation between JuneYao Dairy and Kangyue Technology

Assuming the 90 days trading horizon JuneYao Dairy Co is expected to generate 1.32 times more return on investment than Kangyue Technology. However, JuneYao Dairy is 1.32 times more volatile than Kangyue Technology Co. It trades about -0.18 of its potential returns per unit of risk. Kangyue Technology Co is currently generating about -0.51 per unit of risk. If you would invest  750.00  in JuneYao Dairy Co on October 2, 2024 and sell it today you would lose (121.00) from holding JuneYao Dairy Co or give up 16.13% of portfolio value over 90 days.

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

JuneYao Dairy Co  vs.  Kangyue Technology Co

JuneYao Dairy

Risk-Adjusted Performance

2 of 100

Weak

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

Kangyue Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with JuneYao Dairy and Kangyue Technology

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

The idea behind JuneYao Dairy Co and Kangyue 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.

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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.