Correlation Between Hefei Metalforming and Qilu Bank

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

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

Diversification Opportunities for Hefei Metalforming and Qilu Bank

-0.56

Correlation Coefficient

Hefei Metalforming  Qilu Bank

Excellent diversification

The 3 months correlation between Hefei and Qilu is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Qilu Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilu Bank and Hefei Metalforming 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 Hefei Metalforming Mach 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 Hefei Metalforming i.e., Hefei Metalforming and Qilu Bank go up and down completely randomly.

Pair Corralation between Hefei Metalforming and Qilu Bank

Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to generate 1.98 times more return on investment than Qilu Bank. However, Hefei Metalforming is 1.98 times more volatile than Qilu Bank Co. It trades about 0.01 of its potential returns per unit of risk. Qilu Bank Co is currently generating about 0.01 per unit of risk. If you would invest  709.00  in Hefei Metalforming Mach on October 25, 2024 and sell it today you would lose (3.00) from holding Hefei Metalforming Mach or give up 0.42% of portfolio value over 90 days.

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

Hefei Metalforming Mach  vs.  Qilu Bank Co

Hefei Metalforming Mach

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hefei Metalforming Mach has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hefei Metalforming 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

0 of 100

Very Weak

Over the last 90 days Qilu Bank Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qilu Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hefei Metalforming and Qilu Bank

The main advantage of trading using opposite Hefei Metalforming and Qilu Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hefei Metalforming 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 Hefei Metalforming Mach 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.