Correlation Between Bengang Steel and Qiming Information

Can any of the company-specific risk be diversified away by investing in both Bengang Steel and Qiming Information 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 Bengang Steel and Qiming Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bengang Steel Plates and Qiming Information Technology, you can compare the effects of market volatilities on Bengang Steel and Qiming Information 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 Bengang Steel with a short position of Qiming Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bengang Steel and Qiming Information.

Diversification Opportunities for Bengang Steel and Qiming Information

0.62

Correlation Coefficient

Bengang Steel  Qiming Information

Poor diversification

The 3 months correlation between Bengang and Qiming is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bengang Steel Plates and Qiming Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiming Information and Bengang Steel 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 Bengang Steel Plates are associated (or correlated) with Qiming Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiming Information has no effect on the direction of Bengang Steel i.e., Bengang Steel and Qiming Information go up and down completely randomly.

Pair Corralation between Bengang Steel and Qiming Information

Assuming the 90 days trading horizon Bengang Steel Plates is expected to under-perform the Qiming Information. But the stock apears to be less risky and, when comparing its historical volatility, Bengang Steel Plates is 2.15 times less risky than Qiming Information. The stock trades about -0.17 of its potential returns per unit of risk. The Qiming Information Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,083  in Qiming Information Technology on September 27, 2024 and sell it today you would lose (96.00) from holding Qiming Information Technology or give up 4.61% of portfolio value over 90 days.

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

Bengang Steel Plates  vs.  Qiming Information Technology

Bengang Steel Plates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bengang Steel Plates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bengang Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qiming Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qiming Information Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qiming Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bengang Steel and Qiming Information

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

The idea behind Bengang Steel Plates and Qiming Information Technology 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.