Correlation Between Kandi Technologies and Honda
Can any of the company-specific risk be diversified away by investing in both Kandi Technologies and Honda 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 Kandi Technologies and Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kandi Technologies Group and Honda Motor Co, you can compare the effects of market volatilities on Kandi Technologies and Honda 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 Kandi Technologies with a short position of Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kandi Technologies and Honda.
Diversification Opportunities for Kandi Technologies and Honda
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kandi and Honda is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kandi Technologies Group and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor and Kandi Technologies 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 Kandi Technologies Group are associated (or correlated) with Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Kandi Technologies i.e., Kandi Technologies and Honda go up and down completely randomly.
Pair Corralation between Kandi Technologies and Honda
Given the investment horizon of 90 days Kandi Technologies Group is expected to under-perform the Honda. In addition to that, Kandi Technologies is 2.33 times more volatile than Honda Motor Co. It trades about -0.01 of its total potential returns per unit of risk. Honda Motor Co is currently generating about 0.08 per unit of volatility. If you would invest 3,249 in Honda Motor Co on January 26, 2024 and sell it today you would earn a total of 192.00 from holding Honda Motor Co or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kandi Technologies Group vs. Honda Motor Co
Performance |
| Timeline |
| Kandi Technologies |
| Honda Motor |
Kandi Technologies and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kandi Technologies and Honda
The main advantage of trading using opposite Kandi Technologies and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kandi Technologies position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| Kandi Technologies vs. Fox Factory Holding | Kandi Technologies vs. Douglas Dynamics | Kandi Technologies vs. Monro Muffler Brake |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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