Correlation Between Maxvision Technology and Qingdao Choho

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

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

Diversification Opportunities for Maxvision Technology and Qingdao Choho

0.85

Correlation Coefficient

Maxvision Technology  Qingdao Choho

Very poor diversification

The 3 months correlation between Maxvision and Qingdao is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Maxvision Technology Corp and Qingdao Choho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Choho Industrial and Maxvision Technology 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 Maxvision Technology Corp are associated (or correlated) with Qingdao Choho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Choho Industrial has no effect on the direction of Maxvision Technology i.e., Maxvision Technology and Qingdao Choho go up and down completely randomly.

Pair Corralation between Maxvision Technology and Qingdao Choho

Assuming the 90 days trading horizon Maxvision Technology Corp is expected to generate 1.15 times more return on investment than Qingdao Choho. However, Maxvision Technology is 1.15 times more volatile than Qingdao Choho Industrial. It trades about -0.01 of its potential returns per unit of risk. Qingdao Choho Industrial is currently generating about -0.03 per unit of risk. If you would invest  3,464  in Maxvision Technology Corp on September 27, 2024 and sell it today you would lose (1,036) from holding Maxvision Technology Corp or give up 29.91% of portfolio value over 90 days.

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

Maxvision Technology Corp  vs.  Qingdao Choho Industrial

Maxvision Technology Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maxvision Technology Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maxvision Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Qingdao Choho Industrial

Risk-Adjusted Performance

5 of 100

OK

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

Pair Trading with Maxvision Technology and Qingdao Choho

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

The idea behind Maxvision Technology Corp and Qingdao Choho Industrial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.