Correlation Between Keyang Electric and AeroSpace Technology
Can any of the company-specific risk be diversified away by investing in both Keyang Electric and AeroSpace Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Keyang Electric and AeroSpace Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keyang Electric Machinery and AeroSpace Technology of, you can compare the effects of market volatilities on Keyang Electric and AeroSpace 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 Keyang Electric with a short position of AeroSpace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keyang Electric and AeroSpace Technology.
Diversification Opportunities for Keyang Electric and AeroSpace Technology
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Keyang and AeroSpace is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Keyang Electric Machinery and AeroSpace Technology of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroSpace Technology and Keyang Electric 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 Keyang Electric Machinery are associated (or correlated) with AeroSpace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroSpace Technology has no effect on the direction of Keyang Electric i.e., Keyang Electric and AeroSpace Technology go up and down completely randomly.
Pair Corralation between Keyang Electric and AeroSpace Technology
Assuming the 90 days trading horizon Keyang Electric is expected to generate 23.55 times less return on investment than AeroSpace Technology. But when comparing it to its historical volatility, Keyang Electric Machinery is 1.25 times less risky than AeroSpace Technology. It trades about 0.04 of its potential returns per unit of risk. AeroSpace Technology of is currently generating about 0.81 of returns per unit of risk over similar time horizon. If you would invest 50,900 in AeroSpace Technology of on November 1, 2024 and sell it today you would earn a total of 25,200 from holding AeroSpace Technology of or generate 49.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keyang Electric Machinery vs. AeroSpace Technology of
Performance |
| Timeline |
| Keyang Electric Machinery |
| AeroSpace Technology |
Keyang Electric and AeroSpace Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keyang Electric and AeroSpace Technology
The main advantage of trading using opposite Keyang Electric and AeroSpace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyang Electric position performs unexpectedly, AeroSpace 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 AeroSpace Technology will offset losses from the drop in AeroSpace Technology's long position.| Keyang Electric vs. Youngchang Chemical Co | Keyang Electric vs. Dongnam Chemical Co | Keyang Electric vs. SS TECH | Keyang Electric vs. Namhae Chemical |
| AeroSpace Technology vs. Shinhan Inverse Silver | AeroSpace Technology vs. Keyang Electric Machinery | AeroSpace Technology vs. Taegu Broadcasting | AeroSpace Technology vs. Sungdo Engineering Construction |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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