Correlation Between Runjian Communication and Qtone Education

Can any of the company-specific risk be diversified away by investing in both Runjian Communication and Qtone Education 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 Runjian Communication and Qtone Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Runjian Communication and Qtone Education

0.23

Correlation Coefficient

Runjian Communication  Qtone Education

Modest diversification

The 3 months correlation between Runjian and Qtone is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Runjian Communication Co and Qtone Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qtone Education Group and Runjian Communication 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 Runjian Communication Co are associated (or correlated) with Qtone Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qtone Education Group has no effect on the direction of Runjian Communication i.e., Runjian Communication and Qtone Education go up and down completely randomly.

Pair Corralation between Runjian Communication and Qtone Education

Assuming the 90 days trading horizon Runjian Communication Co is expected to generate 0.85 times more return on investment than Qtone Education. However, Runjian Communication Co is 1.17 times less risky than Qtone Education. It trades about 0.15 of its potential returns per unit of risk. Qtone Education Group is currently generating about -0.25 per unit of risk. If you would invest  3,042  in Runjian Communication Co on October 3, 2024 and sell it today you would earn a total of  320.00  from holding Runjian Communication Co or generate 10.52% return on investment over 90 days.

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

Runjian Communication Co  vs.  Qtone Education Group

Runjian Communication

Risk-Adjusted Performance

0 of 100

Weak

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

Qtone Education Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qtone Education Group 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Runjian Communication and Qtone Education

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

The idea behind Runjian Communication Co and Qtone Education Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.