Correlation Between KSEC Intelligent and Senci Electric

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

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

Diversification Opportunities for KSEC Intelligent and Senci Electric

0.22

Correlation Coefficient

KSEC Intelligent  Senci Electric

Modest diversification

The 3 months correlation between KSEC and Senci is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KSEC Intelligent Technology and Senci Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senci Electric Machinery and KSEC Intelligent 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 KSEC Intelligent Technology are associated (or correlated) with Senci Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senci Electric Machinery has no effect on the direction of KSEC Intelligent i.e., KSEC Intelligent and Senci Electric go up and down completely randomly.

Pair Corralation between KSEC Intelligent and Senci Electric

Assuming the 90 days trading horizon KSEC Intelligent Technology is expected to under-perform the Senci Electric. In addition to that, KSEC Intelligent is 1.12 times more volatile than Senci Electric Machinery. It trades about -0.09 of its total potential returns per unit of risk. Senci Electric Machinery is currently generating about 0.1 per unit of volatility. If you would invest  1,536  in Senci Electric Machinery on October 1, 2024 and sell it today you would earn a total of  263.00  from holding Senci Electric Machinery or generate 17.12% return on investment over 90 days.

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

KSEC Intelligent Technology  vs.  Senci Electric Machinery

KSEC Intelligent Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KSEC Intelligent Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Senci Electric Machinery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senci Electric Machinery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Senci Electric sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KSEC Intelligent and Senci Electric

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

The idea behind KSEC Intelligent Technology and Senci Electric Machinery 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.