Correlation Between Chongqing Road and Kuang Chi

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

Diversification Opportunities for Chongqing Road and Kuang Chi

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Chongqing and Kuang is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge 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 Chongqing Road 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 Chongqing Road Bridge 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 Chongqing Road i.e., Chongqing Road and Kuang Chi go up and down completely randomly.

Pair Corralation between Chongqing Road and Kuang Chi

Assuming the 90 days trading horizon Chongqing Road Bridge is expected to generate 0.69 times more return on investment than Kuang Chi. However, Chongqing Road Bridge is 1.46 times less risky than Kuang Chi. It trades about -0.01 of its potential returns per unit of risk. Kuang Chi Technologies is currently generating about -0.08 per unit of risk. If you would invest  550.00  in Chongqing Road Bridge on November 2, 2024 and sell it today you would lose (5.00) from holding Chongqing Road Bridge or give up 0.91% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Chongqing Road Bridge  vs.  Kuang Chi Technologies

 Performance 
       Timeline  
Chongqing Road Bridge 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Chongqing Road Bridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Kuang Chi Technologies 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Kuang Chi Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kuang Chi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chongqing Road and Kuang Chi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chongqing Road and Kuang Chi

The main advantage of trading using opposite Chongqing Road and Kuang Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road 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.
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The idea behind Chongqing Road Bridge 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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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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