Correlation Between Beijing Kaiwen and Qilu Bank

Can any of the company-specific risk be diversified away by investing in both Beijing Kaiwen and Qilu Bank 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 Beijing Kaiwen and Qilu Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beijing Kaiwen Education and Qilu Bank Co, you can compare the effects of market volatilities on Beijing Kaiwen and Qilu Bank 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 Beijing Kaiwen with a short position of Qilu Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Kaiwen and Qilu Bank.

Diversification Opportunities for Beijing Kaiwen and Qilu Bank

-0.38

Correlation Coefficient

Beijing Kaiwen  Qilu Bank

Very good diversification

The 3 months correlation between Beijing and Qilu is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Kaiwen Education and Qilu Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilu Bank and Beijing Kaiwen 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 Beijing Kaiwen Education are associated (or correlated) with Qilu Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qilu Bank has no effect on the direction of Beijing Kaiwen i.e., Beijing Kaiwen and Qilu Bank go up and down completely randomly.

Pair Corralation between Beijing Kaiwen and Qilu Bank

Assuming the 90 days trading horizon Beijing Kaiwen Education is expected to generate 1.82 times more return on investment than Qilu Bank. However, Beijing Kaiwen is 1.82 times more volatile than Qilu Bank Co. It trades about 0.05 of its potential returns per unit of risk. Qilu Bank Co is currently generating about 0.07 per unit of risk. If you would invest  353.00  in Beijing Kaiwen Education on October 12, 2024 and sell it today you would earn a total of  93.00  from holding Beijing Kaiwen Education or generate 26.35% return on investment over 90 days.

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

Beijing Kaiwen Education  vs.  Qilu Bank Co

Beijing Kaiwen Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Qilu Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Beijing Kaiwen and Qilu Bank

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

The idea behind Beijing Kaiwen Education and Qilu Bank 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..