Correlation Between Qijing Machinery and Inner Mongolia

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

By analyzing existing cross correlation between Qijing Machinery and Inner Mongolia Furui, you can compare the effects of market volatilities on Qijing Machinery and Inner Mongolia 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 Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qijing Machinery and Inner Mongolia.

Diversification Opportunities for Qijing Machinery and Inner Mongolia

-0.46

Correlation Coefficient

Qijing Machinery  Inner Mongolia

Very good diversification

The 3 months correlation between Qijing and Inner is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Qijing Machinery and Inner Mongolia Furui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia Furui 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 Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia Furui has no effect on the direction of Qijing Machinery i.e., Qijing Machinery and Inner Mongolia go up and down completely randomly.

Pair Corralation between Qijing Machinery and Inner Mongolia

Assuming the 90 days trading horizon Qijing Machinery is expected to generate 1.22 times more return on investment than Inner Mongolia. However, Qijing Machinery is 1.22 times more volatile than Inner Mongolia Furui. It trades about -0.07 of its potential returns per unit of risk. Inner Mongolia Furui is currently generating about -0.35 per unit of risk. If you would invest  1,410  in Qijing Machinery on October 5, 2024 and sell it today you would lose (76.00) from holding Qijing Machinery or give up 5.39% of portfolio value over 90 days.

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

Qijing Machinery  vs.  Inner Mongolia Furui

Qijing Machinery

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qijing Machinery are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qijing Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Inner Mongolia Furui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inner Mongolia Furui 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 Qijing Machinery and Inner Mongolia

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

The idea behind Qijing Machinery and Inner Mongolia Furui 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.