Correlation Between QUEEN S and China Medical

Can any of the company-specific risk be diversified away by investing in both QUEEN S and China 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 QUEEN S and China Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between QUEEN S ROAD and China Medical System, you can compare the effects of market volatilities on QUEEN S and China 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 QUEEN S with a short position of China Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUEEN S and China Medical.

Diversification Opportunities for QUEEN S and China Medical

-0.22

Correlation Coefficient

QUEEN S  China Medical

Very good diversification

The 3 months correlation between QUEEN and China is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding QUEEN S ROAD and China Medical System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Medical System and QUEEN S 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 QUEEN S ROAD are associated (or correlated) with China Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Medical System has no effect on the direction of QUEEN S i.e., QUEEN S and China Medical go up and down completely randomly.

Pair Corralation between QUEEN S and China Medical

Assuming the 90 days horizon QUEEN S ROAD is expected to under-perform the China Medical. In addition to that, QUEEN S is 1.02 times more volatile than China Medical System. It trades about -0.14 of its total potential returns per unit of risk. China Medical System is currently generating about 0.04 per unit of volatility. If you would invest  89.00  in China Medical System on December 22, 2024 and sell it today you would earn a total of  4.00  from holding China Medical System or generate 4.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

QUEEN S ROAD  vs.  China Medical System

QUEEN S ROAD

Risk-Adjusted Performance

Very Weak

Over the last 90 days QUEEN S ROAD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

China Medical System

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Medical System are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with QUEEN S and China Medical

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

The idea behind QUEEN S ROAD and China Medical System 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.