Correlation Between Impulse Qingdao and Sichuan Newsnet

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

By analyzing existing cross correlation between Impulse Qingdao Health and Sichuan Newsnet Media, you can compare the effects of market volatilities on Impulse Qingdao and Sichuan Newsnet 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 Impulse Qingdao with a short position of Sichuan Newsnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impulse Qingdao and Sichuan Newsnet.

Diversification Opportunities for Impulse Qingdao and Sichuan Newsnet

0.83

Correlation Coefficient

Impulse Qingdao  Sichuan Newsnet

Very poor diversification

The 3 months correlation between Impulse and Sichuan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Impulse Qingdao Health and Sichuan Newsnet Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Newsnet Media and Impulse Qingdao 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 Impulse Qingdao Health are associated (or correlated) with Sichuan Newsnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Newsnet Media has no effect on the direction of Impulse Qingdao i.e., Impulse Qingdao and Sichuan Newsnet go up and down completely randomly.

Pair Corralation between Impulse Qingdao and Sichuan Newsnet

Assuming the 90 days trading horizon Impulse Qingdao Health is expected to generate 1.25 times more return on investment than Sichuan Newsnet. However, Impulse Qingdao is 1.25 times more volatile than Sichuan Newsnet Media. It trades about 0.08 of its potential returns per unit of risk. Sichuan Newsnet Media is currently generating about 0.05 per unit of risk. If you would invest  2,148  in Impulse Qingdao Health on December 26, 2024 and sell it today you would earn a total of  291.00  from holding Impulse Qingdao Health or generate 13.55% return on investment over 90 days.

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

Impulse Qingdao Health  vs.  Sichuan Newsnet Media

Impulse Qingdao Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Impulse Qingdao Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Impulse Qingdao sustained solid returns over the last few months and may actually be approaching a breakup point.

Sichuan Newsnet Media

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Impulse Qingdao and Sichuan Newsnet

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

The idea behind Impulse Qingdao Health and Sichuan Newsnet Media 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.