Correlation Between China Changjiang and Kite Realty

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

By analyzing existing cross correlation between China Changjiang Mining and Kite Realty Group, you can compare the effects of market volatilities on China Changjiang and Kite Realty 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 China Changjiang with a short position of Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Changjiang and Kite Realty.

Diversification Opportunities for China Changjiang and Kite Realty

0.0

Correlation Coefficient

China Changjiang  Kite Realty

Pay attention - limited upside

The 3 months correlation between China and Kite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Changjiang Mining and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group and China Changjiang 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 China Changjiang Mining are associated (or correlated) with Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of China Changjiang i.e., China Changjiang and Kite Realty go up and down completely randomly.

Pair Corralation between China Changjiang and Kite Realty

Given the investment horizon of 90 days China Changjiang Mining is expected to generate 21.73 times more return on investment than Kite Realty. However, China Changjiang is 21.73 times more volatile than Kite Realty Group. It trades about 0.06 of its potential returns per unit of risk. Kite Realty Group is currently generating about 0.04 per unit of risk. If you would invest  6.00  in China Changjiang Mining on September 12, 2024 and sell it today you would lose (3.23) from holding China Changjiang Mining or give up 53.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.72%
Values	Daily Returns

China Changjiang Mining  vs.  Kite Realty Group

China Changjiang Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Changjiang Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, China Changjiang is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Kite Realty Group

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kite Realty Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kite Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with China Changjiang and Kite Realty

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

The idea behind China Changjiang Mining and Kite Realty Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.