Correlation Between China Green and KS AG

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

By analyzing existing cross correlation between China Green Agriculture and KS AG DRC, you can compare the effects of market volatilities on China Green and KS AG 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 Green with a short position of KS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Green and KS AG.

Diversification Opportunities for China Green and KS AG

0.05

Correlation Coefficient

China Green  KS AG

Significant diversification

The 3 months correlation between China and KPLUY is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding China Green Agriculture and KS AG DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS AG DRC and China Green 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 Green Agriculture are associated (or correlated) with KS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS AG DRC has no effect on the direction of China Green i.e., China Green and KS AG go up and down completely randomly.

Pair Corralation between China Green and KS AG

Considering the 90-day investment horizon China Green Agriculture is expected to generate 2.17 times more return on investment than KS AG. However, China Green is 2.17 times more volatile than KS AG DRC. It trades about 0.04 of its potential returns per unit of risk. KS AG DRC is currently generating about -0.23 per unit of risk. If you would invest  196.00  in China Green Agriculture on September 3, 2024 and sell it today you would earn a total of  2.00  from holding China Green Agriculture or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

China Green Agriculture  vs.  KS AG DRC

China Green Agriculture

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Green Agriculture are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, China Green sustained solid returns over the last few months and may actually be approaching a breakup point.

KS AG DRC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KS AG DRC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, KS AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Green and KS AG

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

The idea behind China Green Agriculture and KS AG DRC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.