Correlation Between Heilongjiang Publishing and Kidswant Children

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

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

Diversification Opportunities for Heilongjiang Publishing and Kidswant Children

0.76

Correlation Coefficient

Heilongjiang Publishing  Kidswant Children

Poor diversification

The 3 months correlation between Heilongjiang and Kidswant is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Publishing Media and Kidswant Children Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kidswant Children and Heilongjiang 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 Heilongjiang Publishing Media are associated (or correlated) with Kidswant Children. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kidswant Children has no effect on the direction of Heilongjiang Publishing i.e., Heilongjiang Publishing and Kidswant Children go up and down completely randomly.

Pair Corralation between Heilongjiang Publishing and Kidswant Children

Assuming the 90 days trading horizon Heilongjiang Publishing is expected to generate 386.63 times less return on investment than Kidswant Children. But when comparing it to its historical volatility, Heilongjiang Publishing Media is 1.37 times less risky than Kidswant Children. It trades about 0.0 of its potential returns per unit of risk. Kidswant Children Products is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  990.00  in Kidswant Children Products on October 10, 2024 and sell it today you would earn a total of  133.00  from holding Kidswant Children Products or generate 13.43% return on investment over 90 days.

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

Heilongjiang Publishing Media  vs.  Kidswant Children Products

Heilongjiang Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kidswant Children

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kidswant Children Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kidswant Children sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heilongjiang Publishing and Kidswant Children

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

The idea behind Heilongjiang Publishing Media and Kidswant Children Products 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.