Correlation Between Hunan Tyen and Qijing Machinery

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

By analyzing existing cross correlation between Hunan Tyen Machinery and Qijing Machinery, you can compare the effects of market volatilities on Hunan Tyen and Qijing Machinery 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 Hunan Tyen with a short position of Qijing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunan Tyen and Qijing Machinery.

Diversification Opportunities for Hunan Tyen and Qijing Machinery

0.77

Correlation Coefficient

Hunan Tyen  Qijing Machinery

Poor diversification

The 3 months correlation between Hunan and Qijing is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hunan Tyen Machinery and Qijing Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qijing Machinery and Hunan Tyen 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 Hunan Tyen Machinery are associated (or correlated) with Qijing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qijing Machinery has no effect on the direction of Hunan Tyen i.e., Hunan Tyen and Qijing Machinery go up and down completely randomly.

Pair Corralation between Hunan Tyen and Qijing Machinery

Assuming the 90 days trading horizon Hunan Tyen is expected to generate 2.68 times less return on investment than Qijing Machinery. In addition to that, Hunan Tyen is 1.21 times more volatile than Qijing Machinery. It trades about 0.01 of its total potential returns per unit of risk. Qijing Machinery is currently generating about 0.03 per unit of volatility. If you would invest  1,246  in Qijing Machinery on October 8, 2024 and sell it today you would earn a total of  42.00  from holding Qijing Machinery or generate 3.37% return on investment over 90 days.

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

Hunan Tyen Machinery  vs.  Qijing Machinery

Hunan Tyen Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

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

Qijing Machinery

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qijing Machinery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qijing Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hunan Tyen and Qijing Machinery

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

The idea behind Hunan Tyen Machinery and Qijing Machinery 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.