Correlation Between China Clean and Kaival Brands

Can any of the company-specific risk be diversified away by investing in both China Clean and Kaival Brands 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 China Clean and Kaival Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Clean Energy and Kaival Brands Innovations, you can compare the effects of market volatilities on China Clean and Kaival Brands 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 China Clean with a short position of Kaival Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Clean and Kaival Brands.

Diversification Opportunities for China Clean and Kaival Brands

0.0

Correlation Coefficient

China Clean  Kaival Brands

Pay attention - limited upside

The 3 months correlation between China and Kaival is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Clean Energy and Kaival Brands Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaival Brands Innovations and China Clean 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 China Clean Energy are associated (or correlated) with Kaival Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaival Brands Innovations has no effect on the direction of China Clean i.e., China Clean and Kaival Brands go up and down completely randomly.

Pair Corralation between China Clean and Kaival Brands

If you would invest  456.00  in Kaival Brands Innovations on September 25, 2024 and sell it today you would lose (373.00) from holding Kaival Brands Innovations or give up 81.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

China Clean Energy  vs.  Kaival Brands Innovations

China Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, China Clean is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Kaival Brands Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaival Brands Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with China Clean and Kaival Brands

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

The idea behind China Clean Energy and Kaival Brands Innovations 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.