Correlation Between Contemporary Amperex and Risuntek

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

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

Diversification Opportunities for Contemporary Amperex and Risuntek

0.81

Correlation Coefficient

Contemporary Amperex  Risuntek

Very poor diversification

The 3 months correlation between Contemporary and Risuntek is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and Risuntek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risuntek and Contemporary Amperex 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 Contemporary Amperex Technology are associated (or correlated) with Risuntek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risuntek has no effect on the direction of Contemporary Amperex i.e., Contemporary Amperex and Risuntek go up and down completely randomly.

Pair Corralation between Contemporary Amperex and Risuntek

Assuming the 90 days trading horizon Contemporary Amperex Technology is expected to generate 1.0 times more return on investment than Risuntek. However, Contemporary Amperex is 1.0 times more volatile than Risuntek. It trades about 0.15 of its potential returns per unit of risk. Risuntek is currently generating about 0.14 per unit of risk. If you would invest  18,820  in Contemporary Amperex Technology on September 23, 2024 and sell it today you would earn a total of  7,451  from holding Contemporary Amperex Technology or generate 39.59% return on investment over 90 days.

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

Contemporary Amperex Technolog  vs.  Risuntek

Contemporary Amperex

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Contemporary Amperex Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Contemporary Amperex sustained solid returns over the last few months and may actually be approaching a breakup point.

Risuntek

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Contemporary Amperex and Risuntek

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

The idea behind Contemporary Amperex Technology and Risuntek 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.