Correlation Between Qingdao Citymedia and Guangzhou Jinyi

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

By analyzing existing cross correlation between Qingdao Citymedia Co and Guangzhou Jinyi Media, you can compare the effects of market volatilities on Qingdao Citymedia and Guangzhou Jinyi 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 Qingdao Citymedia with a short position of Guangzhou Jinyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Citymedia and Guangzhou Jinyi.

Diversification Opportunities for Qingdao Citymedia and Guangzhou Jinyi

0.74

Correlation Coefficient

Qingdao Citymedia  Guangzhou Jinyi

Poor diversification

The 3 months correlation between Qingdao and Guangzhou is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Citymedia Co and Guangzhou Jinyi Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jinyi Media and Qingdao Citymedia 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 Qingdao Citymedia Co are associated (or correlated) with Guangzhou Jinyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jinyi Media has no effect on the direction of Qingdao Citymedia i.e., Qingdao Citymedia and Guangzhou Jinyi go up and down completely randomly.

Pair Corralation between Qingdao Citymedia and Guangzhou Jinyi

Assuming the 90 days trading horizon Qingdao Citymedia Co is expected to generate 0.47 times more return on investment than Guangzhou Jinyi. However, Qingdao Citymedia Co is 2.15 times less risky than Guangzhou Jinyi. It trades about 0.02 of its potential returns per unit of risk. Guangzhou Jinyi Media is currently generating about -0.06 per unit of risk. If you would invest  697.00  in Qingdao Citymedia Co on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Qingdao Citymedia Co or generate 0.43% return on investment over 90 days.

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

Qingdao Citymedia Co  vs.  Guangzhou Jinyi Media

Qingdao Citymedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qingdao Citymedia Co 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.

Guangzhou Jinyi Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangzhou Jinyi Media 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 Qingdao Citymedia and Guangzhou Jinyi

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

The idea behind Qingdao Citymedia Co and Guangzhou Jinyi Media 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.