Correlation Between Shenzhen New and Queclink Wireless

Can any of the company-specific risk be diversified away by investing in both Shenzhen New and Queclink Wireless 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 Shenzhen New and Queclink Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen New Nanshan and Queclink Wireless Solutions, you can compare the effects of market volatilities on Shenzhen New and Queclink Wireless 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 Shenzhen New with a short position of Queclink Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen New and Queclink Wireless.

Diversification Opportunities for Shenzhen New and Queclink Wireless

0.14

Correlation Coefficient

Shenzhen New  Queclink Wireless

Average diversification

The 3 months correlation between Shenzhen and Queclink is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen New Nanshan and Queclink Wireless Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queclink Wireless and Shenzhen New 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 Shenzhen New Nanshan are associated (or correlated) with Queclink Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queclink Wireless has no effect on the direction of Shenzhen New i.e., Shenzhen New and Queclink Wireless go up and down completely randomly.

Pair Corralation between Shenzhen New and Queclink Wireless

Assuming the 90 days trading horizon Shenzhen New Nanshan is expected to under-perform the Queclink Wireless. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen New Nanshan is 1.87 times less risky than Queclink Wireless. The stock trades about -0.71 of its potential returns per unit of risk. The Queclink Wireless Solutions is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  1,580  in Queclink Wireless Solutions on October 12, 2024 and sell it today you would lose (185.00) from holding Queclink Wireless Solutions or give up 11.71% of portfolio value over 90 days.

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

Shenzhen New Nanshan  vs.  Queclink Wireless Solutions

Shenzhen New Nanshan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Queclink Wireless

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Shenzhen New and Queclink Wireless

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

The idea behind Shenzhen New Nanshan and Queclink Wireless Solutions 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.