Correlation Between Qtone Education and Hygon Information

Can any of the company-specific risk be diversified away by investing in both Qtone Education and Hygon Information 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 Hygon Information 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 Hygon Information Technology, you can compare the effects of market volatilities on Qtone Education and Hygon Information 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 Hygon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qtone Education and Hygon Information.

Diversification Opportunities for Qtone Education and Hygon Information

0.26

Correlation Coefficient

Qtone Education  Hygon Information

Modest diversification

The 3 months correlation between Qtone and Hygon is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Qtone Education Group and Hygon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hygon Information 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 Hygon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hygon Information has no effect on the direction of Qtone Education i.e., Qtone Education and Hygon Information go up and down completely randomly.

Pair Corralation between Qtone Education and Hygon Information

Assuming the 90 days trading horizon Qtone Education Group is expected to generate 0.99 times more return on investment than Hygon Information. However, Qtone Education Group is 1.01 times less risky than Hygon Information. It trades about 0.06 of its potential returns per unit of risk. Hygon Information Technology is currently generating about 0.03 per unit of risk. If you would invest  571.00  in Qtone Education Group on December 24, 2024 and sell it today you would earn a total of  58.00  from holding Qtone Education Group or generate 10.16% return on investment over 90 days.

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

Qtone Education Group  vs.  Hygon Information Technology

Qtone Education Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qtone Education Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qtone Education sustained solid returns over the last few months and may actually be approaching a breakup point.

Hygon Information

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hygon Information Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hygon Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Qtone Education and Hygon Information

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

The idea behind Qtone Education Group and Hygon Information Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.