Correlation Between Kunshan Guoli and Linktel Technologies

Can any of the company-specific risk be diversified away by investing in both Kunshan Guoli and Linktel Technologies 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 Linktel Technologies 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 Linktel Technologies Co, you can compare the effects of market volatilities on Kunshan Guoli and Linktel Technologies 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 Linktel Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kunshan Guoli and Linktel Technologies.

Diversification Opportunities for Kunshan Guoli and Linktel Technologies

0.73

Correlation Coefficient

Kunshan Guoli  Linktel Technologies

Poor diversification

The 3 months correlation between Kunshan and Linktel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kunshan Guoli Electronic and Linktel Technologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linktel Technologies 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 Linktel Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linktel Technologies has no effect on the direction of Kunshan Guoli i.e., Kunshan Guoli and Linktel Technologies go up and down completely randomly.

Pair Corralation between Kunshan Guoli and Linktel Technologies

Assuming the 90 days trading horizon Kunshan Guoli Electronic is expected to generate 0.88 times more return on investment than Linktel Technologies. However, Kunshan Guoli Electronic is 1.14 times less risky than Linktel Technologies. It trades about 0.02 of its potential returns per unit of risk. Linktel Technologies Co is currently generating about -0.05 per unit of risk. If you would invest  4,142  in Kunshan Guoli Electronic on October 2, 2024 and sell it today you would earn a total of  47.00  from holding Kunshan Guoli Electronic or generate 1.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Kunshan Guoli Electronic  vs.  Linktel Technologies Co

Kunshan Guoli Electronic

Risk-Adjusted Performance

1 of 100

Weak

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

Linktel Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linktel Technologies Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kunshan Guoli and Linktel Technologies

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

The idea behind Kunshan Guoli Electronic and Linktel Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.