Correlation Between Keda Clean and Qingdao Choho

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

By analyzing existing cross correlation between Keda Clean Energy and Qingdao Choho Industrial, you can compare the effects of market volatilities on Keda Clean and Qingdao Choho 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 Keda Clean with a short position of Qingdao Choho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keda Clean and Qingdao Choho.

Diversification Opportunities for Keda Clean and Qingdao Choho

0.57

Correlation Coefficient

Keda Clean  Qingdao Choho

Very weak diversification

The 3 months correlation between Keda and Qingdao is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Keda Clean Energy and Qingdao Choho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Choho Industrial and Keda Clean 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 Keda Clean Energy are associated (or correlated) with Qingdao Choho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Choho Industrial has no effect on the direction of Keda Clean i.e., Keda Clean and Qingdao Choho go up and down completely randomly.

Pair Corralation between Keda Clean and Qingdao Choho

Assuming the 90 days trading horizon Keda Clean Energy is expected to generate 0.83 times more return on investment than Qingdao Choho. However, Keda Clean Energy is 1.21 times less risky than Qingdao Choho. It trades about 0.11 of its potential returns per unit of risk. Qingdao Choho Industrial is currently generating about -0.09 per unit of risk. If you would invest  788.00  in Keda Clean Energy on October 22, 2024 and sell it today you would earn a total of  24.00  from holding Keda Clean Energy or generate 3.05% return on investment over 90 days.

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

Keda Clean Energy  vs.  Qingdao Choho Industrial

Keda Clean Energy

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keda Clean Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Keda Clean may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Qingdao Choho Industrial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Choho Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qingdao Choho may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Keda Clean and Qingdao Choho

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

The idea behind Keda Clean Energy and Qingdao Choho Industrial 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.