Correlation Between Hainan Haiqi and Kangyue Technology

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

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

Diversification Opportunities for Hainan Haiqi and Kangyue Technology

0.91

Correlation Coefficient

Hainan Haiqi  Kangyue Technology

Almost no diversification

The 3 months correlation between Hainan and Kangyue is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Haiqi Transportation and Kangyue Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kangyue Technology and Hainan Haiqi 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 Hainan Haiqi Transportation are associated (or correlated) with Kangyue Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kangyue Technology has no effect on the direction of Hainan Haiqi i.e., Hainan Haiqi and Kangyue Technology go up and down completely randomly.

Pair Corralation between Hainan Haiqi and Kangyue Technology

Assuming the 90 days trading horizon Hainan Haiqi Transportation is expected to under-perform the Kangyue Technology. But the stock apears to be less risky and, when comparing its historical volatility, Hainan Haiqi Transportation is 1.75 times less risky than Kangyue Technology. The stock trades about -0.01 of its potential returns per unit of risk. The Kangyue Technology Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  976.00  in Kangyue Technology Co on September 26, 2024 and sell it today you would lose (407.00) from holding Kangyue Technology Co or give up 41.7% of portfolio value over 90 days.

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

Hainan Haiqi Transportation  vs.  Kangyue Technology Co

Hainan Haiqi Transpo

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Haiqi Transportation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hainan Haiqi sustained solid returns over the last few months and may actually be approaching a breakup point.

Kangyue Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kangyue Technology Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kangyue Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hainan Haiqi and Kangyue Technology

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

The idea behind Hainan Haiqi Transportation and Kangyue Technology 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.