Correlation Between Qilu Bank and Hainan Airlines

Can any of the company-specific risk be diversified away by investing in both Qilu Bank and Hainan Airlines 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 Hainan Airlines 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 Hainan Airlines Co, you can compare the effects of market volatilities on Qilu Bank and Hainan Airlines 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 Hainan Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qilu Bank and Hainan Airlines.

Diversification Opportunities for Qilu Bank and Hainan Airlines

-0.74

Correlation Coefficient

Qilu Bank  Hainan Airlines

Pay attention - limited upside

The 3 months correlation between Qilu and Hainan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Qilu Bank Co and Hainan Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Airlines 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 Hainan Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Airlines has no effect on the direction of Qilu Bank i.e., Qilu Bank and Hainan Airlines go up and down completely randomly.

Pair Corralation between Qilu Bank and Hainan Airlines

Assuming the 90 days trading horizon Qilu Bank Co is expected to generate 0.52 times more return on investment than Hainan Airlines. However, Qilu Bank Co is 1.93 times less risky than Hainan Airlines. It trades about 0.13 of its potential returns per unit of risk. Hainan Airlines Co is currently generating about -0.04 per unit of risk. If you would invest  528.00  in Qilu Bank Co on December 24, 2024 and sell it today you would earn a total of  68.00  from holding Qilu Bank Co or generate 12.88% return on investment over 90 days.

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

Qilu Bank Co  vs.  Hainan Airlines Co

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 10 (%) 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.

Hainan Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hainan Airlines 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.

Pair Trading with Qilu Bank and Hainan Airlines

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

The idea behind Qilu Bank Co and Hainan Airlines 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.