Correlation Between KION Group and Sinotruk

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

By analyzing existing cross correlation between KION Group AG and Sinotruk Limited, you can compare the effects of market volatilities on KION Group and Sinotruk 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 KION Group with a short position of Sinotruk. Check out your portfolio center. Please also check ongoing floating volatility patterns of KION Group and Sinotruk.

Diversification Opportunities for KION Group and Sinotruk

-0.37

Correlation Coefficient

KION Group  Sinotruk

Very good diversification

The 3 months correlation between KION and Sinotruk is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KION Group AG and Sinotruk Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinotruk Limited and KION Group 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 KION Group AG are associated (or correlated) with Sinotruk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinotruk Limited has no effect on the direction of KION Group i.e., KION Group and Sinotruk go up and down completely randomly.

Pair Corralation between KION Group and Sinotruk

Assuming the 90 days horizon KION Group AG is expected to under-perform the Sinotruk. But the stock apears to be less risky and, when comparing its historical volatility, KION Group AG is 1.15 times less risky than Sinotruk. The stock trades about -0.09 of its potential returns per unit of risk. The Sinotruk Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  258.00  in Sinotruk Limited on September 29, 2024 and sell it today you would earn a total of  18.00  from holding Sinotruk Limited or generate 6.98% return on investment over 90 days.

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

KION Group AG  vs.  Sinotruk Limited

KION Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KION Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sinotruk Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinotruk Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sinotruk may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KION Group and Sinotruk

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

The idea behind KION Group AG and Sinotruk Limited 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.