Correlation Between Shenwu Energy and Qilu Bank

Can any of the company-specific risk be diversified away by investing in both Shenwu Energy and Qilu Bank 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 Shenwu Energy and Qilu Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenwu Energy Saving and Qilu Bank Co, you can compare the effects of market volatilities on Shenwu Energy and Qilu Bank 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 Shenwu Energy with a short position of Qilu Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenwu Energy and Qilu Bank.

Diversification Opportunities for Shenwu Energy and Qilu Bank

-0.81

Correlation Coefficient

Shenwu Energy  Qilu Bank

Pay attention - limited upside

The 3 months correlation between Shenwu and Qilu is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shenwu Energy Saving and Qilu Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilu Bank and Shenwu Energy 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 Shenwu Energy Saving are associated (or correlated) with Qilu Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qilu Bank has no effect on the direction of Shenwu Energy i.e., Shenwu Energy and Qilu Bank go up and down completely randomly.

Pair Corralation between Shenwu Energy and Qilu Bank

Assuming the 90 days trading horizon Shenwu Energy Saving is expected to under-perform the Qilu Bank. In addition to that, Shenwu Energy is 2.83 times more volatile than Qilu Bank Co. It trades about -0.09 of its total potential returns per unit of risk. Qilu Bank Co is currently generating about 0.2 per unit of volatility. If you would invest  509.00  in Qilu Bank Co on December 5, 2024 and sell it today you would earn a total of  98.00  from holding Qilu Bank Co or generate 19.25% return on investment over 90 days.

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

Shenwu Energy Saving  vs.  Qilu Bank Co

Shenwu Energy Saving

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenwu Energy Saving has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Qilu Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qilu Bank Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qilu Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenwu Energy and Qilu Bank

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

The idea behind Shenwu Energy Saving and Qilu Bank 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.