Correlation Between 37 Interactive and Kweichow Moutai

Can any of the company-specific risk be diversified away by investing in both 37 Interactive and Kweichow Moutai 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 37 Interactive and Kweichow Moutai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 37 Interactive Entertainment and Kweichow Moutai Co, you can compare the effects of market volatilities on 37 Interactive and Kweichow Moutai 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 37 Interactive with a short position of Kweichow Moutai. Check out your portfolio center. Please also check ongoing floating volatility patterns of 37 Interactive and Kweichow Moutai.

Diversification Opportunities for 37 Interactive and Kweichow Moutai

0.88

Correlation Coefficient

37 Interactive  Kweichow Moutai

Very poor diversification

The 3 months correlation between 002555 and Kweichow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding 37 Interactive Entertainment and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai and 37 Interactive 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 37 Interactive Entertainment are associated (or correlated) with Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of 37 Interactive i.e., 37 Interactive and Kweichow Moutai go up and down completely randomly.

Pair Corralation between 37 Interactive and Kweichow Moutai

Assuming the 90 days trading horizon 37 Interactive Entertainment is expected to generate 1.28 times more return on investment than Kweichow Moutai. However, 37 Interactive is 1.28 times more volatile than Kweichow Moutai Co. It trades about 0.12 of its potential returns per unit of risk. Kweichow Moutai Co is currently generating about 0.13 per unit of risk. If you would invest  1,322  in 37 Interactive Entertainment on September 17, 2024 and sell it today you would earn a total of  328.00  from holding 37 Interactive Entertainment or generate 24.81% return on investment over 90 days.

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

37 Interactive Entertainment  vs.  Kweichow Moutai Co

37 Interactive Enter

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 37 Interactive Entertainment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 37 Interactive sustained solid returns over the last few months and may actually be approaching a breakup point.

Kweichow Moutai

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kweichow Moutai Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kweichow Moutai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 37 Interactive and Kweichow Moutai

The main advantage of trading using opposite 37 Interactive and Kweichow Moutai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 37 Interactive position performs unexpectedly, Kweichow Moutai 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 Kweichow Moutai will offset losses from the drop in Kweichow Moutai's long position.

The idea behind 37 Interactive Entertainment and Kweichow Moutai Co 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.