Correlation Between Qingdao Foods and Sinofibers Technology

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

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

Diversification Opportunities for Qingdao Foods and Sinofibers Technology

-0.04

Correlation Coefficient

Qingdao Foods  Sinofibers Technology

Good diversification

The 3 months correlation between Qingdao and Sinofibers is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Foods Co and Sinofibers Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinofibers Technology and Qingdao Foods 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 Qingdao Foods Co are associated (or correlated) with Sinofibers Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinofibers Technology has no effect on the direction of Qingdao Foods i.e., Qingdao Foods and Sinofibers Technology go up and down completely randomly.

Pair Corralation between Qingdao Foods and Sinofibers Technology

Assuming the 90 days trading horizon Qingdao Foods Co is expected to under-perform the Sinofibers Technology. But the stock apears to be less risky and, when comparing its historical volatility, Qingdao Foods Co is 1.2 times less risky than Sinofibers Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Sinofibers Technology Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,947  in Sinofibers Technology Co on October 26, 2024 and sell it today you would lose (73.00) from holding Sinofibers Technology Co or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Qingdao Foods Co  vs.  Sinofibers Technology Co

Qingdao Foods

Risk-Adjusted Performance

2 of 100

Weak

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

Sinofibers Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinofibers Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Qingdao Foods and Sinofibers Technology

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

The idea behind Qingdao Foods Co and Sinofibers Technology 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.