Correlation Between Guangzhou KingTeller and Cambricon Technologies
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By analyzing existing cross correlation between Guangzhou KingTeller Technology and Cambricon Technologies Corp, you can compare the effects of market volatilities on Guangzhou KingTeller and Cambricon Technologies 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 Guangzhou KingTeller with a short position of Cambricon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou KingTeller and Cambricon Technologies.
Diversification Opportunities for Guangzhou KingTeller and Cambricon Technologies
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangzhou and Cambricon is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KingTeller Technolog and Cambricon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambricon Technologies and Guangzhou KingTeller 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 Guangzhou KingTeller Technology are associated (or correlated) with Cambricon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambricon Technologies has no effect on the direction of Guangzhou KingTeller i.e., Guangzhou KingTeller and Cambricon Technologies go up and down completely randomly.
Pair Corralation between Guangzhou KingTeller and Cambricon Technologies
Assuming the 90 days trading horizon Guangzhou KingTeller is expected to generate 1.27 times less return on investment than Cambricon Technologies. In addition to that, Guangzhou KingTeller is 1.18 times more volatile than Cambricon Technologies Corp. It trades about 0.2 of its total potential returns per unit of risk. Cambricon Technologies Corp is currently generating about 0.29 per unit of volatility. If you would invest 42,299 in Cambricon Technologies Corp on September 13, 2024 and sell it today you would earn a total of 12,181 from holding Cambricon Technologies Corp or generate 28.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou KingTeller Technolog vs. Cambricon Technologies Corp
Performance |
| Timeline |
| Guangzhou KingTeller |
| Cambricon Technologies |
Guangzhou KingTeller and Cambricon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou KingTeller and Cambricon Technologies
The main advantage of trading using opposite Guangzhou KingTeller and Cambricon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou KingTeller position performs unexpectedly, Cambricon Technologies 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 Cambricon Technologies will offset losses from the drop in Cambricon Technologies' long position.The idea behind Guangzhou KingTeller Technology and Cambricon Technologies Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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