Correlation Between National Silicon and Kweichow Moutai

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

By analyzing existing cross correlation between National Silicon Industry and Kweichow Moutai Co, you can compare the effects of market volatilities on National Silicon and Kweichow Moutai 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 National Silicon with a short position of Kweichow Moutai. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Silicon and Kweichow Moutai.

Diversification Opportunities for National Silicon and Kweichow Moutai

0.3

Correlation Coefficient

National Silicon  Kweichow Moutai

Weak diversification

The 3 months correlation between National and Kweichow is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding National Silicon Industry and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai and National Silicon 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 National Silicon Industry are associated (or correlated) with Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of National Silicon i.e., National Silicon and Kweichow Moutai go up and down completely randomly.

Pair Corralation between National Silicon and Kweichow Moutai

Assuming the 90 days trading horizon National Silicon Industry is expected to under-perform the Kweichow Moutai. In addition to that, National Silicon is 2.1 times more volatile than Kweichow Moutai Co. It trades about -0.03 of its total potential returns per unit of risk. Kweichow Moutai Co is currently generating about 0.06 per unit of volatility. If you would invest  152,500  in Kweichow Moutai Co on December 28, 2024 and sell it today you would earn a total of  6,400  from holding Kweichow Moutai Co or generate 4.2% return on investment over 90 days.

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

National Silicon Industry  vs.  Kweichow Moutai Co

National Silicon Industry

Risk-Adjusted Performance

Very Weak

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

Kweichow Moutai

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kweichow Moutai Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kweichow Moutai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Silicon and Kweichow Moutai

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

The idea behind National Silicon Industry and Kweichow Moutai 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.