Correlation Between Global Ship and Qingling Motors

Can any of the company-specific risk be diversified away by investing in both Global Ship and Qingling Motors 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 Global Ship and Qingling Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Ship Lease and Qingling Motors Co, you can compare the effects of market volatilities on Global Ship and Qingling Motors 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 Global Ship with a short position of Qingling Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Qingling Motors.

Diversification Opportunities for Global Ship and Qingling Motors

0.09

Correlation Coefficient

Global Ship  Qingling Motors

Significant diversification

The 3 months correlation between Global and Qingling is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Qingling Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingling Motors and Global Ship 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 Global Ship Lease are associated (or correlated) with Qingling Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingling Motors has no effect on the direction of Global Ship i.e., Global Ship and Qingling Motors go up and down completely randomly.

Pair Corralation between Global Ship and Qingling Motors

Assuming the 90 days horizon Global Ship Lease is expected to generate 0.85 times more return on investment than Qingling Motors. However, Global Ship Lease is 1.18 times less risky than Qingling Motors. It trades about 0.05 of its potential returns per unit of risk. Qingling Motors Co is currently generating about 0.04 per unit of risk. If you would invest  2,002  in Global Ship Lease on December 21, 2024 and sell it today you would earn a total of  100.00  from holding Global Ship Lease or generate 5.0% return on investment over 90 days.

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

Global Ship Lease  vs.  Qingling Motors Co

Global Ship Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Global Ship is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Qingling Motors

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qingling Motors Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Qingling Motors is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Ship and Qingling Motors

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

The idea behind Global Ship Lease and Qingling Motors 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.