Correlation Between Qiaoyin Environmental and Cansino Biologics

Can any of the company-specific risk be diversified away by investing in both Qiaoyin Environmental and Cansino Biologics 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 Qiaoyin Environmental and Cansino Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qiaoyin Environmental Tech and Cansino Biologics, you can compare the effects of market volatilities on Qiaoyin Environmental and Cansino Biologics 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 Qiaoyin Environmental with a short position of Cansino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qiaoyin Environmental and Cansino Biologics.

Diversification Opportunities for Qiaoyin Environmental and Cansino Biologics

-0.07

Correlation Coefficient

Qiaoyin Environmental  Cansino Biologics

Good diversification

The 3 months correlation between Qiaoyin and Cansino is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Qiaoyin Environmental Tech and Cansino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cansino Biologics and Qiaoyin Environmental 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 Qiaoyin Environmental Tech are associated (or correlated) with Cansino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cansino Biologics has no effect on the direction of Qiaoyin Environmental i.e., Qiaoyin Environmental and Cansino Biologics go up and down completely randomly.

Pair Corralation between Qiaoyin Environmental and Cansino Biologics

Assuming the 90 days trading horizon Qiaoyin Environmental Tech is expected to under-perform the Cansino Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Qiaoyin Environmental Tech is 1.53 times less risky than Cansino Biologics. The stock trades about -0.04 of its potential returns per unit of risk. The Cansino Biologics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,710  in Cansino Biologics on October 25, 2024 and sell it today you would lose (75.00) from holding Cansino Biologics or give up 1.31% of portfolio value over 90 days.

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

Qiaoyin Environmental Tech  vs.  Cansino Biologics

Qiaoyin Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cansino Biologics

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Qiaoyin Environmental and Cansino Biologics

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

The idea behind Qiaoyin Environmental Tech and Cansino Biologics 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.