Correlation Between Kuangda Technology and China Three
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By analyzing existing cross correlation between Kuangda Technology Group and China Three Gorges, you can compare the effects of market volatilities on Kuangda Technology and China Three 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 Kuangda Technology with a short position of China Three. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuangda Technology and China Three.
Diversification Opportunities for Kuangda Technology and China Three
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kuangda and China is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and China Three Gorges in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Three Gorges and Kuangda Technology 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 Kuangda Technology Group are associated (or correlated) with China Three. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Three Gorges has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and China Three go up and down completely randomly.
Pair Corralation between Kuangda Technology and China Three
Assuming the 90 days trading horizon Kuangda Technology Group is expected to under-perform the China Three. In addition to that, Kuangda Technology is 2.49 times more volatile than China Three Gorges. It trades about -0.11 of its total potential returns per unit of risk. China Three Gorges is currently generating about -0.09 per unit of volatility. If you would invest 467.00 in China Three Gorges on August 30, 2024 and sell it today you would lose (12.00) from holding China Three Gorges or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kuangda Technology Group vs. China Three Gorges
Performance |
| Timeline |
| Kuangda Technology |
| China Three Gorges |
Kuangda Technology and China Three Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuangda Technology and China Three
The main advantage of trading using opposite Kuangda Technology and China Three positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuangda Technology position performs unexpectedly, China Three 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 Three will offset losses from the drop in China Three's long position.The idea behind Kuangda Technology Group and China Three Gorges 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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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 CEOs Directory module to screen CEOs from public companies around the world.
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