Correlation Between Anhui Liuguo and Kingnet Network

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

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

Diversification Opportunities for Anhui Liuguo and Kingnet Network

0.68

Correlation Coefficient

Anhui Liuguo  Kingnet Network

Poor diversification

The 3 months correlation between Anhui and Kingnet is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Liuguo Chemical and Kingnet Network Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingnet Network and Anhui Liuguo 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 Anhui Liuguo Chemical are associated (or correlated) with Kingnet Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingnet Network has no effect on the direction of Anhui Liuguo i.e., Anhui Liuguo and Kingnet Network go up and down completely randomly.

Pair Corralation between Anhui Liuguo and Kingnet Network

Assuming the 90 days trading horizon Anhui Liuguo Chemical is expected to generate 1.35 times more return on investment than Kingnet Network. However, Anhui Liuguo is 1.35 times more volatile than Kingnet Network Co. It trades about 0.2 of its potential returns per unit of risk. Kingnet Network Co is currently generating about 0.23 per unit of risk. If you would invest  407.00  in Anhui Liuguo Chemical on September 12, 2024 and sell it today you would earn a total of  231.00  from holding Anhui Liuguo Chemical or generate 56.76% return on investment over 90 days.

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

Anhui Liuguo Chemical  vs.  Kingnet Network Co

Anhui Liuguo Chemical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Liuguo Chemical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Liuguo sustained solid returns over the last few months and may actually be approaching a breakup point.

Kingnet Network

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kingnet Network Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kingnet Network sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Liuguo and Kingnet Network

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

The idea behind Anhui Liuguo Chemical and Kingnet Network 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.