Correlation Between Kinik and Great Computer

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

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

Diversification Opportunities for Kinik and Great Computer

-0.45

Correlation Coefficient

Kinik  Great Computer

Very good diversification

The 3 months correlation between Kinik and Great is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kinik Co and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer and Kinik 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 Kinik Co are associated (or correlated) with Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of Kinik i.e., Kinik and Great Computer go up and down completely randomly.

Pair Corralation between Kinik and Great Computer

Assuming the 90 days trading horizon Kinik is expected to generate 25.3 times less return on investment than Great Computer. But when comparing it to its historical volatility, Kinik Co is 1.54 times less risky than Great Computer. It trades about 0.01 of its potential returns per unit of risk. Great Computer is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Great Computer on September 4, 2024 and sell it today you would earn a total of  390.00  from holding Great Computer or generate 26.9% return on investment over 90 days.

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

Kinik Co  vs.  Great Computer

Kinik

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinik Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kinik is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Great Computer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Computer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Great Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinik and Great Computer

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

The idea behind Kinik Co and Great Computer 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.