Correlation Between GameStop Corp and Kandi Technologies

Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Kandi Technologies 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 GameStop Corp and Kandi Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GameStop Corp and Kandi Technologies Group, you can compare the effects of market volatilities on GameStop Corp and Kandi Technologies 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 GameStop Corp with a short position of Kandi Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Kandi Technologies.

Diversification Opportunities for GameStop Corp and Kandi Technologies

0.38

Correlation Coefficient

GameStop Corp  Kandi Technologies

Weak diversification

The 3 months correlation between GameStop and Kandi is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Kandi Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kandi Technologies and GameStop Corp 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 GameStop Corp are associated (or correlated) with Kandi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kandi Technologies has no effect on the direction of GameStop Corp i.e., GameStop Corp and Kandi Technologies go up and down completely randomly.

Pair Corralation between GameStop Corp and Kandi Technologies

Considering the 90-day investment horizon GameStop Corp is expected to generate 33.1 times less return on investment than Kandi Technologies. In addition to that, GameStop Corp is 1.05 times more volatile than Kandi Technologies Group. It trades about 0.01 of its total potential returns per unit of risk. Kandi Technologies Group is currently generating about 0.28 per unit of volatility. If you would invest  218.00  in Kandi Technologies Group on January 31, 2024 and sell it today you would earn a total of  46.00  from holding Kandi Technologies Group or generate 21.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GameStop Corp  vs.  Kandi Technologies Group

GameStop Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GameStop Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kandi Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kandi Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Kandi Technologies is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GameStop Corp and Kandi Technologies

The main advantage of trading using opposite GameStop Corp and Kandi Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Kandi Technologies 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 Kandi Technologies will offset losses from the drop in Kandi Technologies' long position.

The idea behind GameStop Corp and Kandi Technologies Group 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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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.