Correlation Between Solution Advanced and Keyang Electric
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Keyang Electric 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 Solution Advanced and Keyang Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Keyang Electric Machinery, you can compare the effects of market volatilities on Solution Advanced and Keyang Electric 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 Solution Advanced with a short position of Keyang Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Keyang Electric.
Diversification Opportunities for Solution Advanced and Keyang Electric
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Keyang is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Keyang Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyang Electric Machinery and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Keyang Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyang Electric Machinery has no effect on the direction of Solution Advanced i.e., Solution Advanced and Keyang Electric go up and down completely randomly.
Pair Corralation between Solution Advanced and Keyang Electric
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.53 times more return on investment than Keyang Electric. However, Solution Advanced is 1.53 times more volatile than Keyang Electric Machinery. It trades about 0.0 of its potential returns per unit of risk. Keyang Electric Machinery is currently generating about -0.05 per unit of risk. If you would invest 156,600 in Solution Advanced Technology on September 22, 2024 and sell it today you would lose (12,300) from holding Solution Advanced Technology or give up 7.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Keyang Electric Machinery
Performance |
| Timeline |
| Solution Advanced |
| Keyang Electric Machinery |
Solution Advanced and Keyang Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Keyang Electric
The main advantage of trading using opposite Solution Advanced and Keyang Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Keyang Electric 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 Keyang Electric will offset losses from the drop in Keyang Electric's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Keyang Electric vs. Neungyule Education | Keyang Electric vs. Seoul Electronics Telecom | Keyang Electric vs. Lotte Data Communication | Keyang Electric vs. Daishin Information Communications |
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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