Correlation Between Qilu Bank and Jiangxi JDL

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

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

Diversification Opportunities for Qilu Bank and Jiangxi JDL

0.27

Correlation Coefficient

Qilu Bank  Jiangxi JDL

Modest diversification

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

Pair Corralation between Qilu Bank and Jiangxi JDL

Assuming the 90 days trading horizon Qilu Bank Co is expected to generate 1.48 times more return on investment than Jiangxi JDL. However, Qilu Bank is 1.48 times more volatile than Jiangxi JDL Environmental. It trades about 0.13 of its potential returns per unit of risk. Jiangxi JDL Environmental is currently generating about 0.04 per unit of risk. If you would invest  544.00  in Qilu Bank Co on December 25, 2024 and sell it today you would earn a total of  67.00  from holding Qilu Bank Co or generate 12.32% return on investment over 90 days.

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

Qilu Bank Co  vs.  Jiangxi JDL Environmental

Qilu Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qilu Bank Co are ranked lower than 9 (%) 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.

Jiangxi JDL Environmental

Risk-Adjusted Performance

Weak

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

Pair Trading with Qilu Bank and Jiangxi JDL

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

The idea behind Qilu Bank Co and Jiangxi JDL Environmental 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.