Correlation Between CKM Building and Great Computer

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

By analyzing existing cross correlation between CKM Building Material and Great Computer, you can compare the effects of market volatilities on CKM Building and Great Computer 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 CKM Building with a short position of Great Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKM Building and Great Computer.

Diversification Opportunities for CKM Building and Great Computer

-0.7

Correlation Coefficient

CKM Building  Great Computer

Excellent diversification

The 3 months correlation between CKM and Great is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CKM Building Material and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer and CKM Building 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 CKM Building Material are associated (or correlated) with Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of CKM Building i.e., CKM Building and Great Computer go up and down completely randomly.

Pair Corralation between CKM Building and Great Computer

Assuming the 90 days trading horizon CKM Building Material is expected to generate 0.44 times more return on investment than Great Computer. However, CKM Building Material is 2.29 times less risky than Great Computer. It trades about 0.2 of its potential returns per unit of risk. Great Computer is currently generating about -0.13 per unit of risk. If you would invest  3,202  in CKM Building Material on December 29, 2024 and sell it today you would earn a total of  533.00  from holding CKM Building Material or generate 16.65% return on investment over 90 days.

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

CKM Building Material  vs.  Great Computer

CKM Building Material

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CKM Building Material are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CKM Building showed solid returns over the last few months and may actually be approaching a breakup point.

Great Computer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Computer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with CKM Building and Great Computer

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

The idea behind CKM Building Material and Great Computer 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.