Correlation Between Qingdao Gon and Shenzhen Noposion

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

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

Diversification Opportunities for Qingdao Gon and Shenzhen Noposion

-0.04

Correlation Coefficient

Qingdao Gon  Shenzhen Noposion

Good diversification

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

Pair Corralation between Qingdao Gon and Shenzhen Noposion

Assuming the 90 days trading horizon Qingdao Gon Technology is expected to generate 0.81 times more return on investment than Shenzhen Noposion. However, Qingdao Gon Technology is 1.23 times less risky than Shenzhen Noposion. It trades about 0.08 of its potential returns per unit of risk. Shenzhen Noposion Agrochemicals is currently generating about -0.12 per unit of risk. If you would invest  2,383  in Qingdao Gon Technology on December 27, 2024 and sell it today you would earn a total of  188.00  from holding Qingdao Gon Technology or generate 7.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Qingdao Gon Technology  vs.  Shenzhen Noposion Agrochemical

Qingdao Gon Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Gon Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qingdao Gon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shenzhen Noposion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Noposion Agrochemicals 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Qingdao Gon and Shenzhen Noposion

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

The idea behind Qingdao Gon Technology and Shenzhen Noposion Agrochemicals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.