Correlation Between Kontour Medical and China Express

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

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

Diversification Opportunities for Kontour Medical and China Express

0.73

Correlation Coefficient

Kontour Medical  China Express

Poor diversification

The 3 months correlation between Kontour and China is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kontour Medical Technology and China Express Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Express Airlines and Kontour Medical 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 Kontour Medical Technology are associated (or correlated) with China Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Express Airlines has no effect on the direction of Kontour Medical i.e., Kontour Medical and China Express go up and down completely randomly.

Pair Corralation between Kontour Medical and China Express

Assuming the 90 days trading horizon Kontour Medical Technology is expected to under-perform the China Express. In addition to that, Kontour Medical is 1.08 times more volatile than China Express Airlines. It trades about -0.01 of its total potential returns per unit of risk. China Express Airlines is currently generating about 0.06 per unit of volatility. If you would invest  745.00  in China Express Airlines on October 1, 2024 and sell it today you would earn a total of  58.00  from holding China Express Airlines or generate 7.79% return on investment over 90 days.

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

Kontour Medical Technology  vs.  China Express Airlines

Kontour Medical Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kontour Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kontour Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

China Express Airlines

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Express Airlines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Express may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kontour Medical and China Express

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

The idea behind Kontour Medical Technology and China Express Airlines 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.