Correlation Between Qingdao Choho and China Vanke

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

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

Diversification Opportunities for Qingdao Choho and China Vanke

0.11

Correlation Coefficient

Qingdao Choho  China Vanke

Average diversification

The 3 months correlation between Qingdao and China is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Choho Industrial and China Vanke Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Vanke and Qingdao Choho 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 Choho Industrial are associated (or correlated) with China Vanke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Vanke has no effect on the direction of Qingdao Choho i.e., Qingdao Choho and China Vanke go up and down completely randomly.

Pair Corralation between Qingdao Choho and China Vanke

Assuming the 90 days trading horizon Qingdao Choho Industrial is expected to generate 1.32 times more return on investment than China Vanke. However, Qingdao Choho is 1.32 times more volatile than China Vanke Co. It trades about 0.14 of its potential returns per unit of risk. China Vanke Co is currently generating about -0.05 per unit of risk. If you would invest  3,135  in Qingdao Choho Industrial on December 4, 2024 and sell it today you would earn a total of  878.00  from holding Qingdao Choho Industrial or generate 28.01% return on investment over 90 days.

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

Qingdao Choho Industrial  vs.  China Vanke Co

Qingdao Choho Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Choho Industrial are ranked lower than 10 (%) 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.

China Vanke

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Vanke Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Qingdao Choho and China Vanke

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

The idea behind Qingdao Choho Industrial and China Vanke Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.