Correlation Between ButOne Information and Qiming Information

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

By analyzing existing cross correlation between ButOne Information Corp and Qiming Information Technology, you can compare the effects of market volatilities on ButOne Information and Qiming Information 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 ButOne Information with a short position of Qiming Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of ButOne Information and Qiming Information.

Diversification Opportunities for ButOne Information and Qiming Information

0.62

Correlation Coefficient

ButOne Information  Qiming Information

Poor diversification

The 3 months correlation between ButOne and Qiming is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ButOne Information Corp and Qiming Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiming Information and ButOne Information 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 ButOne Information Corp are associated (or correlated) with Qiming Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiming Information has no effect on the direction of ButOne Information i.e., ButOne Information and Qiming Information go up and down completely randomly.

Pair Corralation between ButOne Information and Qiming Information

Assuming the 90 days trading horizon ButOne Information is expected to generate 1.36 times less return on investment than Qiming Information. But when comparing it to its historical volatility, ButOne Information Corp is 1.55 times less risky than Qiming Information. It trades about 0.11 of its potential returns per unit of risk. Qiming Information Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,307  in Qiming Information Technology on September 29, 2024 and sell it today you would earn a total of  721.00  from holding Qiming Information Technology or generate 55.16% return on investment over 90 days.

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

ButOne Information Corp  vs.  Qiming Information Technology

ButOne Information Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ButOne Information Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ButOne Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Qiming Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qiming Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qiming Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ButOne Information and Qiming Information

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

The idea behind ButOne Information Corp and Qiming Information Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.