Correlation Between KAGA EL and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both KAGA EL and CHINA EDUCATION 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 KAGA EL and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAGA EL LTD and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on KAGA EL and CHINA EDUCATION 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 KAGA EL with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAGA EL and CHINA EDUCATION.
Diversification Opportunities for KAGA EL and CHINA EDUCATION
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KAGA and CHINA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KAGA EL LTD and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and KAGA EL 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 KAGA EL LTD are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of KAGA EL i.e., KAGA EL and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between KAGA EL and CHINA EDUCATION
Assuming the 90 days horizon KAGA EL LTD is expected to generate 0.25 times more return on investment than CHINA EDUCATION. However, KAGA EL LTD is 3.98 times less risky than CHINA EDUCATION. It trades about -0.13 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about -0.11 per unit of risk. If you would invest 1,760 in KAGA EL LTD on August 28, 2024 and sell it today you would lose (110.00) from holding KAGA EL LTD or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAGA EL LTD vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| KAGA EL LTD |
| CHINA EDUCATION GROUP |
KAGA EL and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAGA EL and CHINA EDUCATION
The main advantage of trading using opposite KAGA EL and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAGA EL position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| KAGA EL vs. Dairy Farm International | KAGA EL vs. AUSNUTRIA DAIRY | KAGA EL vs. PT Indofood Sukses | KAGA EL vs. SENECA FOODS A |
| CHINA EDUCATION vs. Choice Hotels International | CHINA EDUCATION vs. Wyndham Hotels Resorts | CHINA EDUCATION vs. FIREWEED METALS P | CHINA EDUCATION vs. PARKEN Sport Entertainment |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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