Correlation Between Kweichow Moutai and XiAn Dagang
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By analyzing existing cross correlation between Kweichow Moutai Co and XiAn Dagang Road, you can compare the effects of market volatilities on Kweichow Moutai and XiAn Dagang 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 XiAn Dagang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kweichow Moutai and XiAn Dagang.
Diversification Opportunities for Kweichow Moutai and XiAn Dagang
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kweichow and XiAn is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kweichow Moutai Co and XiAn Dagang Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XiAn Dagang Road 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 XiAn Dagang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XiAn Dagang Road has no effect on the direction of Kweichow Moutai i.e., Kweichow Moutai and XiAn Dagang go up and down completely randomly.
Pair Corralation between Kweichow Moutai and XiAn Dagang
Assuming the 90 days trading horizon Kweichow Moutai Co is expected to under-perform the XiAn Dagang. But the stock apears to be less risky and, when comparing its historical volatility, Kweichow Moutai Co is 2.1 times less risky than XiAn Dagang. The stock trades about -0.11 of its potential returns per unit of risk. The XiAn Dagang Road is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 592.00 in XiAn Dagang Road on November 9, 2024 and sell it today you would earn a total of 28.00 from holding XiAn Dagang Road or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kweichow Moutai Co vs. XiAn Dagang Road
Performance |
| Timeline |
| Kweichow Moutai |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| XiAn Dagang Road |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Kweichow Moutai and XiAn Dagang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kweichow Moutai and XiAn Dagang
The main advantage of trading using opposite Kweichow Moutai and XiAn Dagang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kweichow Moutai position performs unexpectedly, XiAn Dagang 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 XiAn Dagang will offset losses from the drop in XiAn Dagang's long position.The idea behind Kweichow Moutai Co and XiAn Dagang Road 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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