Correlation Between Kandi Technologies and Valens

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

By analyzing existing cross correlation between Kandi Technologies Group and Valens, you can compare the effects of market volatilities on Kandi Technologies and Valens 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 Kandi Technologies with a short position of Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kandi Technologies and Valens.

Diversification Opportunities for Kandi Technologies and Valens

0.22

Correlation Coefficient

Kandi Technologies  Valens

Modest diversification

The 3 months correlation between Kandi and Valens is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kandi Technologies Group and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and Kandi Technologies 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 Kandi Technologies Group are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Kandi Technologies i.e., Kandi Technologies and Valens go up and down completely randomly.

Pair Corralation between Kandi Technologies and Valens

Given the investment horizon of 90 days Kandi Technologies Group is expected to under-perform the Valens. In addition to that, Kandi Technologies is 1.05 times more volatile than Valens. It trades about -0.17 of its total potential returns per unit of risk. Valens is currently generating about -0.04 per unit of volatility. If you would invest  218.00  in Valens on September 21, 2024 and sell it today you would lose (38.00) from holding Valens or give up 17.43% of portfolio value over 90 days.

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

Kandi Technologies Group  vs.  Valens

Kandi Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kandi Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kandi Technologies and Valens

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

The idea behind Kandi Technologies Group and Valens 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.