Correlation Between Qingdao Choho and Amlogic Shanghai

Can any of the company-specific risk be diversified away by investing in both Qingdao Choho and Amlogic Shanghai 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 Amlogic Shanghai 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 Amlogic Shanghai Co, you can compare the effects of market volatilities on Qingdao Choho and Amlogic Shanghai 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 Amlogic Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Choho and Amlogic Shanghai.

Diversification Opportunities for Qingdao Choho and Amlogic Shanghai

-0.07

Correlation Coefficient

Qingdao Choho  Amlogic Shanghai

Good diversification

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

Pair Corralation between Qingdao Choho and Amlogic Shanghai

Assuming the 90 days trading horizon Qingdao Choho is expected to generate 1.34 times less return on investment than Amlogic Shanghai. But when comparing it to its historical volatility, Qingdao Choho Industrial is 1.23 times less risky than Amlogic Shanghai. It trades about 0.06 of its potential returns per unit of risk. Amlogic Shanghai Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,336  in Amlogic Shanghai Co on October 22, 2024 and sell it today you would earn a total of  789.00  from holding Amlogic Shanghai Co or generate 10.76% return on investment over 90 days.

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

Qingdao Choho Industrial  vs.  Amlogic Shanghai Co

Qingdao Choho Industrial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Choho Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qingdao Choho may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Amlogic Shanghai

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Qingdao Choho and Amlogic Shanghai

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

The idea behind Qingdao Choho Industrial and Amlogic Shanghai 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.