Correlation Between Soyea Technology and Qinghaihuading Industrial

Can any of the company-specific risk be diversified away by investing in both Soyea Technology and Qinghaihuading Industrial 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 Soyea Technology and Qinghaihuading Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Soyea Technology Co and Qinghaihuading Industrial Co, you can compare the effects of market volatilities on Soyea Technology and Qinghaihuading Industrial 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 Soyea Technology with a short position of Qinghaihuading Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soyea Technology and Qinghaihuading Industrial.

Diversification Opportunities for Soyea Technology and Qinghaihuading Industrial

0.46

Correlation Coefficient

Soyea Technology  Qinghaihuading Industrial

Very weak diversification

The 3 months correlation between Soyea and Qinghaihuading is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Soyea Technology Co and Qinghaihuading Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qinghaihuading Industrial and Soyea Technology 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 Soyea Technology Co are associated (or correlated) with Qinghaihuading Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qinghaihuading Industrial has no effect on the direction of Soyea Technology i.e., Soyea Technology and Qinghaihuading Industrial go up and down completely randomly.

Pair Corralation between Soyea Technology and Qinghaihuading Industrial

Assuming the 90 days trading horizon Soyea Technology Co is expected to under-perform the Qinghaihuading Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Soyea Technology Co is 1.19 times less risky than Qinghaihuading Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The Qinghaihuading Industrial Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  419.00  in Qinghaihuading Industrial Co on September 30, 2024 and sell it today you would lose (34.00) from holding Qinghaihuading Industrial Co or give up 8.11% of portfolio value over 90 days.

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

Soyea Technology Co  vs.  Qinghaihuading Industrial Co

Soyea Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Soyea Technology Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Soyea Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Qinghaihuading Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Soyea Technology and Qinghaihuading Industrial

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

The idea behind Soyea Technology Co and Qinghaihuading Industrial 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.