Correlation Between Jiangxi Hengda and Qiming Information

Can any of the company-specific risk be diversified away by investing in both Jiangxi Hengda and Qiming Information 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 Jiangxi Hengda and Qiming Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangxi Hengda Hi Tech and Qiming Information Technology, you can compare the effects of market volatilities on Jiangxi Hengda and Qiming Information 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 Jiangxi Hengda with a short position of Qiming Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi Hengda and Qiming Information.

Diversification Opportunities for Jiangxi Hengda and Qiming Information

0.66

Correlation Coefficient

Jiangxi Hengda  Qiming Information

Poor diversification

The 3 months correlation between Jiangxi and Qiming is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi Hengda Hi Tech and Qiming Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiming Information and Jiangxi Hengda 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 Jiangxi Hengda Hi Tech are associated (or correlated) with Qiming Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiming Information has no effect on the direction of Jiangxi Hengda i.e., Jiangxi Hengda and Qiming Information go up and down completely randomly.

Pair Corralation between Jiangxi Hengda and Qiming Information

Assuming the 90 days trading horizon Jiangxi Hengda Hi Tech is expected to under-perform the Qiming Information. But the stock apears to be less risky and, when comparing its historical volatility, Jiangxi Hengda Hi Tech is 1.26 times less risky than Qiming Information. The stock trades about -0.01 of its potential returns per unit of risk. The Qiming Information Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,430  in Qiming Information Technology on October 11, 2024 and sell it today you would earn a total of  340.00  from holding Qiming Information Technology or generate 23.78% return on investment over 90 days.

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

Jiangxi Hengda Hi Tech  vs.  Qiming Information Technology

Jiangxi Hengda Hi

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Hengda Hi Tech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangxi Hengda may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Qiming Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jiangxi Hengda and Qiming Information

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

The idea behind Jiangxi Hengda Hi Tech and Qiming Information Technology 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.