Correlation Between Jiujiang Shanshui and Qingdao Baheal

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

By analyzing existing cross correlation between Jiujiang Shanshui Technology and Qingdao Baheal Medical, you can compare the effects of market volatilities on Jiujiang Shanshui and Qingdao Baheal 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 Jiujiang Shanshui with a short position of Qingdao Baheal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiujiang Shanshui and Qingdao Baheal.

Diversification Opportunities for Jiujiang Shanshui and Qingdao Baheal

0.4

Correlation Coefficient

Jiujiang Shanshui  Qingdao Baheal

Very weak diversification

The 3 months correlation between Jiujiang and Qingdao is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Jiujiang Shanshui Technology and Qingdao Baheal Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Baheal Medical and Jiujiang Shanshui 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 Jiujiang Shanshui Technology are associated (or correlated) with Qingdao Baheal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Baheal Medical has no effect on the direction of Jiujiang Shanshui i.e., Jiujiang Shanshui and Qingdao Baheal go up and down completely randomly.

Pair Corralation between Jiujiang Shanshui and Qingdao Baheal

Assuming the 90 days trading horizon Jiujiang Shanshui Technology is expected to generate 0.75 times more return on investment than Qingdao Baheal. However, Jiujiang Shanshui Technology is 1.34 times less risky than Qingdao Baheal. It trades about 0.04 of its potential returns per unit of risk. Qingdao Baheal Medical is currently generating about -0.04 per unit of risk. If you would invest  1,444  in Jiujiang Shanshui Technology on October 11, 2024 and sell it today you would earn a total of  50.00  from holding Jiujiang Shanshui Technology or generate 3.46% return on investment over 90 days.

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

Jiujiang Shanshui Technology  vs.  Qingdao Baheal Medical

Jiujiang Shanshui

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiujiang Shanshui Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiujiang Shanshui is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qingdao Baheal Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qingdao Baheal Medical 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 Jiujiang Shanshui and Qingdao Baheal

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

The idea behind Jiujiang Shanshui Technology and Qingdao Baheal Medical 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.