Correlation Between Kunshan Guoli and RoadMain T

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

Diversification Opportunities for Kunshan Guoli and RoadMain T

0.85

Correlation Coefficient

Kunshan Guoli  RoadMain T

Very poor diversification

The 3 months correlation between Kunshan and RoadMain is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kunshan Guoli Electronic and RoadMain T Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RoadMain T 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 RoadMain T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RoadMain T has no effect on the direction of Kunshan Guoli i.e., Kunshan Guoli and RoadMain T go up and down completely randomly.

Pair Corralation between Kunshan Guoli and RoadMain T

Assuming the 90 days trading horizon Kunshan Guoli Electronic is expected to generate 1.26 times more return on investment than RoadMain T. However, Kunshan Guoli is 1.26 times more volatile than RoadMain T Co. It trades about 0.0 of its potential returns per unit of risk. RoadMain T Co is currently generating about -0.1 per unit of risk. If you would invest  4,270  in Kunshan Guoli Electronic on September 30, 2024 and sell it today you would lose (88.00) from holding Kunshan Guoli Electronic or give up 2.06% of portfolio value over 90 days.

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

Kunshan Guoli Electronic  vs.  RoadMain T Co

Kunshan Guoli Electronic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kunshan Guoli Electronic are ranked lower than 5 (%) 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.

RoadMain T

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Kunshan Guoli and RoadMain T

The main advantage of trading using opposite Kunshan Guoli and RoadMain T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kunshan Guoli position performs unexpectedly, RoadMain T 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 RoadMain T will offset losses from the drop in RoadMain T's long position.

The idea behind Kunshan Guoli Electronic and RoadMain T 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.