Correlation Between Qingdao Choho and Chison Medical

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

Diversification Opportunities for Qingdao Choho and Chison Medical

0.64

Correlation Coefficient

Qingdao Choho  Chison Medical

Poor diversification

The 3 months correlation between Qingdao and Chison is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Choho Industrial and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn 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 Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Qingdao Choho i.e., Qingdao Choho and Chison Medical go up and down completely randomly.

Pair Corralation between Qingdao Choho and Chison Medical

Assuming the 90 days trading horizon Qingdao Choho Industrial is expected to under-perform the Chison Medical. But the stock apears to be less risky and, when comparing its historical volatility, Qingdao Choho Industrial is 1.29 times less risky than Chison Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Chison Medical Technologies is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,808  in Chison Medical Technologies on October 25, 2024 and sell it today you would lose (1,226) from holding Chison Medical Technologies or give up 32.2% of portfolio value over 90 days.

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

Qingdao Choho Industrial  vs.  Chison Medical Technologies

Qingdao Choho Industrial

Risk-Adjusted Performance

5 of 100

Modest

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 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chison Medical Techn

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Qingdao Choho and Chison Medical

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

The idea behind Qingdao Choho Industrial and Chison Medical Technologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.