Correlation Between Qtone Education and Jiahe Foods

Can any of the company-specific risk be diversified away by investing in both Qtone Education and Jiahe Foods 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 Qtone Education and Jiahe Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qtone Education Group and Jiahe Foods Industry, you can compare the effects of market volatilities on Qtone Education and Jiahe Foods 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 Qtone Education with a short position of Jiahe Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qtone Education and Jiahe Foods.

Diversification Opportunities for Qtone Education and Jiahe Foods

0.43

Correlation Coefficient

Qtone Education  Jiahe Foods

Very weak diversification

The 3 months correlation between Qtone and Jiahe is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Qtone Education Group and Jiahe Foods Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiahe Foods Industry and Qtone Education 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 Qtone Education Group are associated (or correlated) with Jiahe Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiahe Foods Industry has no effect on the direction of Qtone Education i.e., Qtone Education and Jiahe Foods go up and down completely randomly.

Pair Corralation between Qtone Education and Jiahe Foods

Assuming the 90 days trading horizon Qtone Education Group is expected to under-perform the Jiahe Foods. In addition to that, Qtone Education is 1.14 times more volatile than Jiahe Foods Industry. It trades about -0.34 of its total potential returns per unit of risk. Jiahe Foods Industry is currently generating about -0.28 per unit of volatility. If you would invest  1,486  in Jiahe Foods Industry on October 11, 2024 and sell it today you would lose (288.00) from holding Jiahe Foods Industry or give up 19.38% of portfolio value over 90 days.

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

Qtone Education Group  vs.  Jiahe Foods Industry

Qtone Education Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jiahe Foods Industry

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiahe Foods Industry are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiahe Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qtone Education and Jiahe Foods

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

The idea behind Qtone Education Group and Jiahe Foods Industry 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.