Correlation Between Qinghaihuading Industrial and Beijing-Shanghai

Can any of the company-specific risk be diversified away by investing in both Qinghaihuading Industrial and Beijing-Shanghai 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 Qinghaihuading Industrial and Beijing-Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qinghaihuading Industrial Co and Beijing Shanghai High Speed, you can compare the effects of market volatilities on Qinghaihuading Industrial and Beijing-Shanghai 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 Qinghaihuading Industrial with a short position of Beijing-Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qinghaihuading Industrial and Beijing-Shanghai.

Diversification Opportunities for Qinghaihuading Industrial and Beijing-Shanghai

0.73

Correlation Coefficient

Qinghaihuading Industrial  Beijing-Shanghai

Poor diversification

The 3 months correlation between Qinghaihuading and Beijing-Shanghai is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Qinghaihuading Industrial Co and Beijing Shanghai High Speed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Shanghai High and Qinghaihuading Industrial 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 Qinghaihuading Industrial Co are associated (or correlated) with Beijing-Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Shanghai High has no effect on the direction of Qinghaihuading Industrial i.e., Qinghaihuading Industrial and Beijing-Shanghai go up and down completely randomly.

Pair Corralation between Qinghaihuading Industrial and Beijing-Shanghai

Assuming the 90 days trading horizon Qinghaihuading Industrial Co is expected to under-perform the Beijing-Shanghai. In addition to that, Qinghaihuading Industrial is 4.76 times more volatile than Beijing Shanghai High Speed. It trades about -0.09 of its total potential returns per unit of risk. Beijing Shanghai High Speed is currently generating about -0.2 per unit of volatility. If you would invest  628.00  in Beijing Shanghai High Speed on December 29, 2024 and sell it today you would lose (66.00) from holding Beijing Shanghai High Speed or give up 10.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Qinghaihuading Industrial Co  vs.  Beijing Shanghai High Speed

Qinghaihuading Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qinghaihuading Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Beijing Shanghai High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijing Shanghai High Speed 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 Qinghaihuading Industrial and Beijing-Shanghai

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

The idea behind Qinghaihuading Industrial Co and Beijing Shanghai High Speed 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.