Correlation Between Qinghai Salt and Kingclean Electric

Can any of the company-specific risk be diversified away by investing in both Qinghai Salt and Kingclean Electric 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 Qinghai Salt and Kingclean Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qinghai Salt Lake and Kingclean Electric Co, you can compare the effects of market volatilities on Qinghai Salt and Kingclean Electric 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 Qinghai Salt with a short position of Kingclean Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qinghai Salt and Kingclean Electric.

Diversification Opportunities for Qinghai Salt and Kingclean Electric

0.69

Correlation Coefficient

Qinghai Salt  Kingclean Electric

Poor diversification

The 3 months correlation between Qinghai and Kingclean is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Qinghai Salt Lake and Kingclean Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingclean Electric and Qinghai Salt 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 Qinghai Salt Lake are associated (or correlated) with Kingclean Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingclean Electric has no effect on the direction of Qinghai Salt i.e., Qinghai Salt and Kingclean Electric go up and down completely randomly.

Pair Corralation between Qinghai Salt and Kingclean Electric

Assuming the 90 days trading horizon Qinghai Salt Lake is expected to under-perform the Kingclean Electric. But the stock apears to be less risky and, when comparing its historical volatility, Qinghai Salt Lake is 1.17 times less risky than Kingclean Electric. The stock trades about -0.19 of its potential returns per unit of risk. The Kingclean Electric Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,364  in Kingclean Electric Co on October 22, 2024 and sell it today you would lose (6.00) from holding Kingclean Electric Co or give up 0.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Qinghai Salt Lake  vs.  Kingclean Electric Co

Qinghai Salt Lake

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kingclean Electric

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Qinghai Salt and Kingclean Electric

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

The idea behind Qinghai Salt Lake and Kingclean Electric 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..