Correlation Between Qingdao Foods and Poly Real

Can any of the company-specific risk be diversified away by investing in both Qingdao Foods and Poly Real 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 Poly Real 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 Poly Real Estate, you can compare the effects of market volatilities on Qingdao Foods and Poly Real 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 Poly Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Foods and Poly Real.

Diversification Opportunities for Qingdao Foods and Poly Real

-0.16

Correlation Coefficient

Qingdao Foods  Poly Real

Good diversification

The 3 months correlation between Qingdao and Poly is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Foods Co and Poly Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poly Real Estate 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 Poly Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poly Real Estate has no effect on the direction of Qingdao Foods i.e., Qingdao Foods and Poly Real go up and down completely randomly.

Pair Corralation between Qingdao Foods and Poly Real

Assuming the 90 days trading horizon Qingdao Foods Co is expected to generate 2.54 times more return on investment than Poly Real. However, Qingdao Foods is 2.54 times more volatile than Poly Real Estate. It trades about -0.11 of its potential returns per unit of risk. Poly Real Estate is currently generating about -0.52 per unit of risk. If you would invest  1,440  in Qingdao Foods Co on October 8, 2024 and sell it today you would lose (119.00) from holding Qingdao Foods Co or give up 8.26% of portfolio value over 90 days.

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

Qingdao Foods Co  vs.  Poly Real Estate

Qingdao Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Foods Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Qingdao Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Poly Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poly Real Estate 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Qingdao Foods and Poly Real

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

The idea behind Qingdao Foods Co and Poly Real Estate 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .