Correlation Between Industrial and Qilu Bank

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

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

Diversification Opportunities for Industrial and Qilu Bank

0.83

Correlation Coefficient

Industrial  Qilu Bank

Very poor diversification

The 3 months correlation between Industrial and Qilu is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Qilu Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilu Bank and Industrial 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 Industrial and Commercial 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 Industrial i.e., Industrial and Qilu Bank go up and down completely randomly.

Pair Corralation between Industrial and Qilu Bank

Assuming the 90 days trading horizon Industrial is expected to generate 1.73 times less return on investment than Qilu Bank. But when comparing it to its historical volatility, Industrial and Commercial is 1.54 times less risky than Qilu Bank. It trades about 0.16 of its potential returns per unit of risk. Qilu Bank Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  420.00  in Qilu Bank Co on September 12, 2024 and sell it today you would earn a total of  104.00  from holding Qilu Bank Co or generate 24.76% return on investment over 90 days.

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

Industrial and Commercial  vs.  Qilu Bank Co

Industrial and Commercial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Qilu Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qilu Bank Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qilu Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industrial and Qilu Bank

The main advantage of trading using opposite Industrial and Qilu Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial 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 Industrial and Commercial 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.