Correlation Between China International and Kweichow Moutai
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By analyzing existing cross correlation between China International Capital and Kweichow Moutai Co, you can compare the effects of market volatilities on China International and Kweichow Moutai 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 China International with a short position of Kweichow Moutai. Check out your portfolio center. Please also check ongoing floating volatility patterns of China International and Kweichow Moutai.
Diversification Opportunities for China International and Kweichow Moutai
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Kweichow is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding China International Capital and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai and China International 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 China International Capital are associated (or correlated) with Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of China International i.e., China International and Kweichow Moutai go up and down completely randomly.
Pair Corralation between China International and Kweichow Moutai
Assuming the 90 days trading horizon China International Capital is expected to under-perform the Kweichow Moutai. In addition to that, China International is 1.77 times more volatile than Kweichow Moutai Co. It trades about -0.08 of its total potential returns per unit of risk. Kweichow Moutai Co is currently generating about -0.12 per unit of volatility. If you would invest 156,500 in Kweichow Moutai Co on August 28, 2024 and sell it today you would lose (6,643) from holding Kweichow Moutai Co or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China International Capital vs. Kweichow Moutai Co
Performance |
| Timeline |
| China International |
| Kweichow Moutai |
China International and Kweichow Moutai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China International and Kweichow Moutai
The main advantage of trading using opposite China International and Kweichow Moutai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China International position performs unexpectedly, Kweichow Moutai 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 Kweichow Moutai will offset losses from the drop in Kweichow Moutai's long position.The idea behind China International Capital and Kweichow Moutai 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.
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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