Correlation Between Shanghai Putailai and Queclink Wireless

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

By analyzing existing cross correlation between Shanghai Putailai New and Queclink Wireless Solutions, you can compare the effects of market volatilities on Shanghai Putailai and Queclink Wireless 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 Shanghai Putailai with a short position of Queclink Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Putailai and Queclink Wireless.

Diversification Opportunities for Shanghai Putailai and Queclink Wireless

0.36

Correlation Coefficient

Shanghai Putailai  Queclink Wireless

Weak diversification

The 3 months correlation between Shanghai and Queclink is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Putailai New and Queclink Wireless Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queclink Wireless and Shanghai Putailai 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 Shanghai Putailai New are associated (or correlated) with Queclink Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queclink Wireless has no effect on the direction of Shanghai Putailai i.e., Shanghai Putailai and Queclink Wireless go up and down completely randomly.

Pair Corralation between Shanghai Putailai and Queclink Wireless

Assuming the 90 days trading horizon Shanghai Putailai New is expected to generate 0.98 times more return on investment than Queclink Wireless. However, Shanghai Putailai New is 1.02 times less risky than Queclink Wireless. It trades about -0.01 of its potential returns per unit of risk. Queclink Wireless Solutions is currently generating about -0.06 per unit of risk. If you would invest  1,643  in Shanghai Putailai New on October 5, 2024 and sell it today you would lose (114.00) from holding Shanghai Putailai New or give up 6.94% of portfolio value over 90 days.

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

Shanghai Putailai New  vs.  Queclink Wireless Solutions

Shanghai Putailai New

Risk-Adjusted Performance

0 of 100

Very Weak

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

Queclink Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Queclink Wireless Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shanghai Putailai and Queclink Wireless

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

The idea behind Shanghai Putailai New and Queclink Wireless Solutions 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.