Correlation Between Kweichow Moutai and TongFu Microelectronics
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By analyzing existing cross correlation between Kweichow Moutai Co and TongFu Microelectronics Co, you can compare the effects of market volatilities on Kweichow Moutai and TongFu Microelectronics 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 Kweichow Moutai with a short position of TongFu Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kweichow Moutai and TongFu Microelectronics.
Diversification Opportunities for Kweichow Moutai and TongFu Microelectronics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kweichow and TongFu is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kweichow Moutai Co and TongFu Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TongFu Microelectronics and Kweichow Moutai 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 Kweichow Moutai Co are associated (or correlated) with TongFu Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TongFu Microelectronics has no effect on the direction of Kweichow Moutai i.e., Kweichow Moutai and TongFu Microelectronics go up and down completely randomly.
Pair Corralation between Kweichow Moutai and TongFu Microelectronics
Assuming the 90 days trading horizon Kweichow Moutai Co is expected to under-perform the TongFu Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Kweichow Moutai Co is 3.93 times less risky than TongFu Microelectronics. The stock trades about -0.1 of its potential returns per unit of risk. The TongFu Microelectronics Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,347 in TongFu Microelectronics Co on August 29, 2024 and sell it today you would earn a total of 552.00 from holding TongFu Microelectronics Co or generate 23.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kweichow Moutai Co vs. TongFu Microelectronics Co
Performance |
| Timeline |
| Kweichow Moutai |
| TongFu Microelectronics |
Kweichow Moutai and TongFu Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kweichow Moutai and TongFu Microelectronics
The main advantage of trading using opposite Kweichow Moutai and TongFu Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kweichow Moutai position performs unexpectedly, TongFu Microelectronics 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 TongFu Microelectronics will offset losses from the drop in TongFu Microelectronics' long position.| Kweichow Moutai vs. PetroChina Co Ltd | Kweichow Moutai vs. China Mobile Limited | Kweichow Moutai vs. Ping An Insurance | Kweichow Moutai vs. China Petroleum Chemical |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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