Correlation Between Kuangda Technology and Hefei Metalforming
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By analyzing existing cross correlation between Kuangda Technology Group and Hefei Metalforming Mach, you can compare the effects of market volatilities on Kuangda Technology and Hefei Metalforming 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 Hefei Metalforming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuangda Technology and Hefei Metalforming.
Diversification Opportunities for Kuangda Technology and Hefei Metalforming
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kuangda and Hefei is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and Hefei Metalforming Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hefei Metalforming Mach 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 Hefei Metalforming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hefei Metalforming Mach has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and Hefei Metalforming go up and down completely randomly.
Pair Corralation between Kuangda Technology and Hefei Metalforming
Assuming the 90 days trading horizon Kuangda Technology Group is expected to under-perform the Hefei Metalforming. But the stock apears to be less risky and, when comparing its historical volatility, Kuangda Technology Group is 1.1 times less risky than Hefei Metalforming. The stock trades about -0.04 of its potential returns per unit of risk. The Hefei Metalforming Mach is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 763.00 in Hefei Metalforming Mach on November 8, 2024 and sell it today you would lose (37.00) from holding Hefei Metalforming Mach or give up 4.85% 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. Hefei Metalforming Mach
Performance |
| Timeline |
| Kuangda Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hefei Metalforming Mach |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kuangda Technology and Hefei Metalforming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuangda Technology and Hefei Metalforming
The main advantage of trading using opposite Kuangda Technology and Hefei Metalforming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuangda Technology position performs unexpectedly, Hefei Metalforming 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 Hefei Metalforming will offset losses from the drop in Hefei Metalforming's long position.The idea behind Kuangda Technology Group and Hefei Metalforming Mach 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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