Correlation Between Kuangda Technology and Qumei Furniture
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By analyzing existing cross correlation between Kuangda Technology Group and Qumei Furniture Group, you can compare the effects of market volatilities on Kuangda Technology and Qumei Furniture 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 Qumei Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuangda Technology and Qumei Furniture.
Diversification Opportunities for Kuangda Technology and Qumei Furniture
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kuangda and Qumei is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and Qumei Furniture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qumei Furniture Group 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 Qumei Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qumei Furniture Group has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and Qumei Furniture go up and down completely randomly.
Pair Corralation between Kuangda Technology and Qumei Furniture
Assuming the 90 days trading horizon Kuangda Technology Group is expected to generate 1.0 times more return on investment than Qumei Furniture. However, Kuangda Technology is 1.0 times more volatile than Qumei Furniture Group. It trades about 0.04 of its potential returns per unit of risk. Qumei Furniture Group is currently generating about 0.01 per unit of risk. If you would invest 450.00 in Kuangda Technology Group on October 14, 2024 and sell it today you would earn a total of 26.00 from holding Kuangda Technology Group or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kuangda Technology Group vs. Qumei Furniture Group
Performance |
| Timeline |
| Kuangda Technology |
| Qumei Furniture Group |
Kuangda Technology and Qumei Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuangda Technology and Qumei Furniture
The main advantage of trading using opposite Kuangda Technology and Qumei Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuangda Technology position performs unexpectedly, Qumei Furniture 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 Qumei Furniture will offset losses from the drop in Qumei Furniture's long position.The idea behind Kuangda Technology Group and Qumei Furniture 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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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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