Correlation Between Shaanxi Broadcast and Qilu Bank

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

By analyzing existing cross correlation between Shaanxi Broadcast TV and Qilu Bank Co, you can compare the effects of market volatilities on Shaanxi Broadcast and Qilu Bank 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 Shaanxi Broadcast with a short position of Qilu Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Broadcast and Qilu Bank.

Diversification Opportunities for Shaanxi Broadcast and Qilu Bank

-0.27

Correlation Coefficient

Shaanxi Broadcast  Qilu Bank

Very good diversification

The 3 months correlation between Shaanxi and Qilu is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Broadcast TV and Qilu Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilu Bank and Shaanxi Broadcast 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 Shaanxi Broadcast TV are associated (or correlated) with Qilu Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qilu Bank has no effect on the direction of Shaanxi Broadcast i.e., Shaanxi Broadcast and Qilu Bank go up and down completely randomly.

Pair Corralation between Shaanxi Broadcast and Qilu Bank

Assuming the 90 days trading horizon Shaanxi Broadcast TV is expected to under-perform the Qilu Bank. In addition to that, Shaanxi Broadcast is 1.86 times more volatile than Qilu Bank Co. It trades about -0.14 of its total potential returns per unit of risk. Qilu Bank Co is currently generating about -0.04 per unit of volatility. If you would invest  561.00  in Qilu Bank Co on October 9, 2024 and sell it today you would lose (16.00) from holding Qilu Bank Co or give up 2.85% of portfolio value over 90 days.

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

Shaanxi Broadcast TV  vs.  Qilu Bank Co

Shaanxi Broadcast

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shaanxi Broadcast TV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shaanxi Broadcast is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qilu Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qilu Bank Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qilu Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shaanxi Broadcast and Qilu Bank

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

The idea behind Shaanxi Broadcast TV and Qilu Bank Co 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.