Correlation Between Kunshan Guoli and Titan Wind

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

By analyzing existing cross correlation between Kunshan Guoli Electronic and Titan Wind Energy, you can compare the effects of market volatilities on Kunshan Guoli and Titan Wind 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 Kunshan Guoli with a short position of Titan Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kunshan Guoli and Titan Wind.

Diversification Opportunities for Kunshan Guoli and Titan Wind

0.1

Correlation Coefficient

Kunshan Guoli  Titan Wind

Average diversification

The 3 months correlation between Kunshan and Titan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kunshan Guoli Electronic and Titan Wind Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Wind Energy and Kunshan Guoli 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 Kunshan Guoli Electronic are associated (or correlated) with Titan Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Wind Energy has no effect on the direction of Kunshan Guoli i.e., Kunshan Guoli and Titan Wind go up and down completely randomly.

Pair Corralation between Kunshan Guoli and Titan Wind

Assuming the 90 days trading horizon Kunshan Guoli Electronic is expected to generate 1.45 times more return on investment than Titan Wind. However, Kunshan Guoli is 1.45 times more volatile than Titan Wind Energy. It trades about 0.1 of its potential returns per unit of risk. Titan Wind Energy is currently generating about -0.22 per unit of risk. If you would invest  4,266  in Kunshan Guoli Electronic on December 2, 2024 and sell it today you would earn a total of  628.00  from holding Kunshan Guoli Electronic or generate 14.72% return on investment over 90 days.

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

Kunshan Guoli Electronic  vs.  Titan Wind Energy

Kunshan Guoli Electronic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kunshan Guoli Electronic are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kunshan Guoli sustained solid returns over the last few months and may actually be approaching a breakup point.

Titan Wind Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Titan Wind Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kunshan Guoli and Titan Wind

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

The idea behind Kunshan Guoli Electronic and Titan Wind Energy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.