Correlation Between Tongxing Environmental and Kuangda Technology
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By analyzing existing cross correlation between Tongxing Environmental Protection and Kuangda Technology Group, you can compare the effects of market volatilities on Tongxing Environmental and Kuangda Technology 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 Tongxing Environmental with a short position of Kuangda Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongxing Environmental and Kuangda Technology.
Diversification Opportunities for Tongxing Environmental and Kuangda Technology
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tongxing and Kuangda is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tongxing Environmental Protect and Kuangda Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuangda Technology and Tongxing Environmental 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 Tongxing Environmental Protection are associated (or correlated) with Kuangda Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuangda Technology has no effect on the direction of Tongxing Environmental i.e., Tongxing Environmental and Kuangda Technology go up and down completely randomly.
Pair Corralation between Tongxing Environmental and Kuangda Technology
Assuming the 90 days trading horizon Tongxing Environmental Protection is expected to generate 1.12 times more return on investment than Kuangda Technology. However, Tongxing Environmental is 1.12 times more volatile than Kuangda Technology Group. It trades about 0.15 of its potential returns per unit of risk. Kuangda Technology Group is currently generating about 0.12 per unit of risk. If you would invest 1,411 in Tongxing Environmental Protection on November 6, 2024 and sell it today you would earn a total of 74.00 from holding Tongxing Environmental Protection or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongxing Environmental Protect vs. Kuangda Technology Group
Performance |
| Timeline |
| Tongxing Environmental |
| Kuangda Technology |
Tongxing Environmental and Kuangda Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongxing Environmental and Kuangda Technology
The main advantage of trading using opposite Tongxing Environmental and Kuangda Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongxing Environmental position performs unexpectedly, Kuangda Technology 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 Kuangda Technology will offset losses from the drop in Kuangda Technology's long position.The idea behind Tongxing Environmental Protection and Kuangda Technology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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