Correlation Between Kung Long and Grape King

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

By analyzing existing cross correlation between Kung Long Batteries and Grape King Bio, you can compare the effects of market volatilities on Kung Long and Grape King 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 Kung Long with a short position of Grape King. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kung Long and Grape King.

Diversification Opportunities for Kung Long and Grape King

0.39

Correlation Coefficient

Kung Long  Grape King

Weak diversification

The 3 months correlation between Kung and Grape is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kung Long Batteries and Grape King Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grape King Bio and Kung Long 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 Kung Long Batteries are associated (or correlated) with Grape King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grape King Bio has no effect on the direction of Kung Long i.e., Kung Long and Grape King go up and down completely randomly.

Pair Corralation between Kung Long and Grape King

Assuming the 90 days trading horizon Kung Long is expected to generate 1.41 times less return on investment than Grape King. In addition to that, Kung Long is 1.72 times more volatile than Grape King Bio. It trades about 0.06 of its total potential returns per unit of risk. Grape King Bio is currently generating about 0.15 per unit of volatility. If you would invest  14,250  in Grape King Bio on September 13, 2024 and sell it today you would earn a total of  1,200  from holding Grape King Bio or generate 8.42% return on investment over 90 days.

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

Kung Long Batteries  vs.  Grape King Bio

Kung Long Batteries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kung Long Batteries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kung Long is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Grape King Bio

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grape King Bio are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Grape King may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kung Long and Grape King

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

The idea behind Kung Long Batteries and Grape King Bio 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.