Correlation Between KENEDIX OFFICE and ANGANG STEEL

Can any of the company-specific risk be diversified away by investing in both KENEDIX OFFICE and ANGANG STEEL 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 KENEDIX OFFICE and ANGANG STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KENEDIX OFFICE INV and ANGANG STEEL H , you can compare the effects of market volatilities on KENEDIX OFFICE and ANGANG STEEL 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 KENEDIX OFFICE with a short position of ANGANG STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENEDIX OFFICE and ANGANG STEEL.

Diversification Opportunities for KENEDIX OFFICE and ANGANG STEEL

-0.34

Correlation Coefficient

KENEDIX OFFICE  ANGANG STEEL

Very good diversification

The 3 months correlation between KENEDIX and ANGANG is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding KENEDIX OFFICE INV and ANGANG STEEL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGANG STEEL H and KENEDIX OFFICE 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 KENEDIX OFFICE INV are associated (or correlated) with ANGANG STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGANG STEEL H has no effect on the direction of KENEDIX OFFICE i.e., KENEDIX OFFICE and ANGANG STEEL go up and down completely randomly.

Pair Corralation between KENEDIX OFFICE and ANGANG STEEL

Assuming the 90 days horizon KENEDIX OFFICE INV is expected to generate 0.5 times more return on investment than ANGANG STEEL. However, KENEDIX OFFICE INV is 2.01 times less risky than ANGANG STEEL. It trades about 0.01 of its potential returns per unit of risk. ANGANG STEEL H is currently generating about -0.01 per unit of risk. If you would invest  88,000  in KENEDIX OFFICE INV on October 25, 2024 and sell it today you would earn a total of  0.00  from holding KENEDIX OFFICE INV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

KENEDIX OFFICE INV  vs.  ANGANG STEEL H

KENEDIX OFFICE INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KENEDIX OFFICE INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KENEDIX OFFICE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ANGANG STEEL H

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANGANG STEEL H has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ANGANG STEEL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KENEDIX OFFICE and ANGANG STEEL

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

The idea behind KENEDIX OFFICE INV and ANGANG STEEL H 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.