Correlation Between Qijing Machinery and Jinzai Food

Can any of the company-specific risk be diversified away by investing in both Qijing Machinery and Jinzai Food 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 Qijing Machinery and Jinzai Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qijing Machinery and Jinzai Food Group, you can compare the effects of market volatilities on Qijing Machinery and Jinzai Food 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 Qijing Machinery with a short position of Jinzai Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qijing Machinery and Jinzai Food.

Diversification Opportunities for Qijing Machinery and Jinzai Food

0.07

Correlation Coefficient

Qijing Machinery  Jinzai Food

Significant diversification

The 3 months correlation between Qijing and Jinzai is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Qijing Machinery and Jinzai Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinzai Food Group and Qijing Machinery 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 Qijing Machinery are associated (or correlated) with Jinzai Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinzai Food Group has no effect on the direction of Qijing Machinery i.e., Qijing Machinery and Jinzai Food go up and down completely randomly.

Pair Corralation between Qijing Machinery and Jinzai Food

Assuming the 90 days trading horizon Qijing Machinery is expected to generate 1.25 times more return on investment than Jinzai Food. However, Qijing Machinery is 1.25 times more volatile than Jinzai Food Group. It trades about 0.01 of its potential returns per unit of risk. Jinzai Food Group is currently generating about -0.01 per unit of risk. If you would invest  1,420  in Qijing Machinery on October 27, 2024 and sell it today you would lose (29.00) from holding Qijing Machinery or give up 2.04% of portfolio value over 90 days.

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

Qijing Machinery  vs.  Jinzai Food Group

Qijing Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jinzai Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Qijing Machinery and Jinzai Food

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

The idea behind Qijing Machinery and Jinzai Food 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.