Correlation Between Inspur Software and Qingdao Hi

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

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

Diversification Opportunities for Inspur Software and Qingdao Hi

0.8

Correlation Coefficient

Inspur Software  Qingdao Hi

Very poor diversification

The 3 months correlation between Inspur and Qingdao is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Inspur Software Co and Qingdao Hi Tech Moulds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Hi Tech and Inspur Software 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 Inspur Software Co are associated (or correlated) with Qingdao Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Hi Tech has no effect on the direction of Inspur Software i.e., Inspur Software and Qingdao Hi go up and down completely randomly.

Pair Corralation between Inspur Software and Qingdao Hi

Assuming the 90 days trading horizon Inspur Software is expected to generate 2.21 times less return on investment than Qingdao Hi. But when comparing it to its historical volatility, Inspur Software Co is 1.52 times less risky than Qingdao Hi. It trades about 0.01 of its potential returns per unit of risk. Qingdao Hi Tech Moulds is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,159  in Qingdao Hi Tech Moulds on October 5, 2024 and sell it today you would lose (180.00) from holding Qingdao Hi Tech Moulds or give up 8.34% of portfolio value over 90 days.

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

Inspur Software Co  vs.  Qingdao Hi Tech Moulds

Inspur Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspur Software 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.

Qingdao Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qingdao Hi Tech Moulds 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Inspur Software and Qingdao Hi

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

The idea behind Inspur Software Co and Qingdao Hi Tech Moulds 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.