Correlation Between Kangxin New and Bohai Leasing

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Can any of the company-specific risk be diversified away by investing in both Kangxin New and Bohai Leasing 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 Kangxin New and Bohai Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kangxin New Materials and Bohai Leasing Co, you can compare the effects of market volatilities on Kangxin New and Bohai Leasing 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 Kangxin New with a short position of Bohai Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kangxin New and Bohai Leasing.

Diversification Opportunities for Kangxin New and Bohai Leasing

KangxinBohaiDiversified AwayKangxinBohaiDiversified Away100%
0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Kangxin and Bohai is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kangxin New Materials and Bohai Leasing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohai Leasing and Kangxin New 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 Kangxin New Materials are associated (or correlated) with Bohai Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohai Leasing has no effect on the direction of Kangxin New i.e., Kangxin New and Bohai Leasing go up and down completely randomly.

Pair Corralation between Kangxin New and Bohai Leasing

Assuming the 90 days trading horizon Kangxin New Materials is expected to generate 1.07 times more return on investment than Bohai Leasing. However, Kangxin New is 1.07 times more volatile than Bohai Leasing Co. It trades about -0.21 of its potential returns per unit of risk. Bohai Leasing Co is currently generating about -0.23 per unit of risk. If you would invest  212.00  in Kangxin New Materials on October 30, 2024 and sell it today you would lose (20.00) from holding Kangxin New Materials or give up 9.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Kangxin New Materials  vs.  Bohai Leasing Co

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0204060
JavaScript chart by amCharts 3.21.15600076 000415
       Timeline  
Kangxin New Materials 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kangxin New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1.822.22.42.62.83
Bohai Leasing 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Bohai Leasing Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bohai Leasing sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan3.544.55

Kangxin New and Bohai Leasing Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.68-4.25-2.83-1.40.01.372.784.195.617.02 0.0180.0200.0220.0240.0260.0280.0300.032
JavaScript chart by amCharts 3.21.15600076 000415
       Returns  

Pair Trading with Kangxin New and Bohai Leasing

The main advantage of trading using opposite Kangxin New and Bohai Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kangxin New position performs unexpectedly, Bohai Leasing 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 Bohai Leasing will offset losses from the drop in Bohai Leasing's long position.
The idea behind Kangxin New Materials and Bohai Leasing Co 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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