Correlation Between Kuangda Technology and Sichuan Chuantou
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By analyzing existing cross correlation between Kuangda Technology Group and Sichuan Chuantou Energy, you can compare the effects of market volatilities on Kuangda Technology and Sichuan Chuantou 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 Kuangda Technology with a short position of Sichuan Chuantou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuangda Technology and Sichuan Chuantou.
Diversification Opportunities for Kuangda Technology and Sichuan Chuantou
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kuangda and Sichuan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and Sichuan Chuantou Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Chuantou Energy and Kuangda Technology 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 Kuangda Technology Group are associated (or correlated) with Sichuan Chuantou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Chuantou Energy has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and Sichuan Chuantou go up and down completely randomly.
Pair Corralation between Kuangda Technology and Sichuan Chuantou
Assuming the 90 days trading horizon Kuangda Technology is expected to generate 1.33 times less return on investment than Sichuan Chuantou. In addition to that, Kuangda Technology is 1.74 times more volatile than Sichuan Chuantou Energy. It trades about 0.03 of its total potential returns per unit of risk. Sichuan Chuantou Energy is currently generating about 0.06 per unit of volatility. If you would invest 1,189 in Sichuan Chuantou Energy on September 24, 2024 and sell it today you would earn a total of 519.00 from holding Sichuan Chuantou Energy or generate 43.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kuangda Technology Group vs. Sichuan Chuantou Energy
Performance |
Timeline |
Kuangda Technology |
Sichuan Chuantou Energy |
Kuangda Technology and Sichuan Chuantou Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kuangda Technology and Sichuan Chuantou
The main advantage of trading using opposite Kuangda Technology and Sichuan Chuantou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuangda Technology position performs unexpectedly, Sichuan Chuantou 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 Sichuan Chuantou will offset losses from the drop in Sichuan Chuantou's long position.The idea behind Kuangda Technology Group and Sichuan Chuantou Energy 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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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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