Correlation Between Tongxing Environmental and Kuang Chi
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By analyzing existing cross correlation between Tongxing Environmental Protection and Kuang Chi Technologies, you can compare the effects of market volatilities on Tongxing Environmental and Kuang Chi 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 Kuang Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongxing Environmental and Kuang Chi.
Diversification Opportunities for Tongxing Environmental and Kuang Chi
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tongxing and Kuang is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tongxing Environmental Protect and Kuang Chi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuang Chi Technologies 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 Kuang Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuang Chi Technologies has no effect on the direction of Tongxing Environmental i.e., Tongxing Environmental and Kuang Chi go up and down completely randomly.
Pair Corralation between Tongxing Environmental and Kuang Chi
Assuming the 90 days trading horizon Tongxing Environmental Protection is expected to generate 0.85 times more return on investment than Kuang Chi. However, Tongxing Environmental Protection is 1.18 times less risky than Kuang Chi. It trades about 0.03 of its potential returns per unit of risk. Kuang Chi Technologies is currently generating about -0.07 per unit of risk. If you would invest 1,455 in Tongxing Environmental Protection on October 26, 2024 and sell it today you would earn a total of 14.00 from holding Tongxing Environmental Protection or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tongxing Environmental Protect vs. Kuang Chi Technologies
Performance |
| Timeline |
| Tongxing Environmental |
| Kuang Chi Technologies |
Tongxing Environmental and Kuang Chi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongxing Environmental and Kuang Chi
The main advantage of trading using opposite Tongxing Environmental and Kuang Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongxing Environmental position performs unexpectedly, Kuang Chi 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 Kuang Chi will offset losses from the drop in Kuang Chi's long position.The idea behind Tongxing Environmental Protection and Kuang Chi Technologies 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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