Correlation Between Guangdong Ellington and Qtone Education

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

By analyzing existing cross correlation between Guangdong Ellington Electronics and Qtone Education Group, you can compare the effects of market volatilities on Guangdong Ellington and Qtone Education 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 Guangdong Ellington with a short position of Qtone Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Ellington and Qtone Education.

Diversification Opportunities for Guangdong Ellington and Qtone Education

0.74

Correlation Coefficient

Guangdong Ellington  Qtone Education

Poor diversification

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

Pair Corralation between Guangdong Ellington and Qtone Education

Assuming the 90 days trading horizon Guangdong Ellington is expected to generate 16.26 times less return on investment than Qtone Education. But when comparing it to its historical volatility, Guangdong Ellington Electronics is 1.5 times less risky than Qtone Education. It trades about 0.01 of its potential returns per unit of risk. Qtone Education Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  549.00  in Qtone Education Group on December 26, 2024 and sell it today you would earn a total of  69.00  from holding Qtone Education Group or generate 12.57% return on investment over 90 days.

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

Guangdong Ellington Electronic  vs.  Qtone Education Group

Guangdong Ellington

Risk-Adjusted Performance

Very Weak

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

Qtone Education Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qtone Education Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qtone Education sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guangdong Ellington and Qtone Education

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

The idea behind Guangdong Ellington Electronics and Qtone Education Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.