Correlation Between Piotech and Kingnet Network

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

By analyzing existing cross correlation between Piotech Inc A and Kingnet Network Co, you can compare the effects of market volatilities on Piotech and Kingnet Network 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 Piotech with a short position of Kingnet Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piotech and Kingnet Network.

Diversification Opportunities for Piotech and Kingnet Network

0.86

Correlation Coefficient

Piotech  Kingnet Network

Very poor diversification

The 3 months correlation between Piotech and Kingnet is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Piotech Inc A and Kingnet Network Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingnet Network and Piotech 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 Piotech Inc A are associated (or correlated) with Kingnet Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingnet Network has no effect on the direction of Piotech i.e., Piotech and Kingnet Network go up and down completely randomly.

Pair Corralation between Piotech and Kingnet Network

Assuming the 90 days trading horizon Piotech is expected to generate 1.97 times less return on investment than Kingnet Network. In addition to that, Piotech is 1.19 times more volatile than Kingnet Network Co. It trades about 0.03 of its total potential returns per unit of risk. Kingnet Network Co is currently generating about 0.06 per unit of volatility. If you would invest  674.00  in Kingnet Network Co on September 24, 2024 and sell it today you would earn a total of  735.00  from holding Kingnet Network Co or generate 109.05% return on investment over 90 days.

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

Piotech Inc A  vs.  Kingnet Network Co

Piotech Inc A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Piotech Inc A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Piotech sustained solid returns over the last few months and may actually be approaching a breakup point.

Kingnet Network

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingnet Network Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kingnet Network sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Piotech and Kingnet Network

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

The idea behind Piotech Inc A and Kingnet Network 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.