Correlation Between Qijing Machinery and Wonders Information

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

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

Diversification Opportunities for Qijing Machinery and Wonders Information

0.32

Correlation Coefficient

Qijing Machinery  Wonders Information

Weak diversification

The 3 months correlation between Qijing and Wonders is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Qijing Machinery and Wonders Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonders Information 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 Wonders Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonders Information has no effect on the direction of Qijing Machinery i.e., Qijing Machinery and Wonders Information go up and down completely randomly.

Pair Corralation between Qijing Machinery and Wonders Information

Assuming the 90 days trading horizon Qijing Machinery is expected to generate 1.21 times more return on investment than Wonders Information. However, Qijing Machinery is 1.21 times more volatile than Wonders Information. It trades about 0.23 of its potential returns per unit of risk. Wonders Information is currently generating about 0.03 per unit of risk. If you would invest  1,259  in Qijing Machinery on December 25, 2024 and sell it today you would earn a total of  1,002  from holding Qijing Machinery or generate 79.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Qijing Machinery  vs.  Wonders Information

Qijing Machinery

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qijing Machinery are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qijing Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Wonders Information

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wonders Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wonders Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Qijing Machinery and Wonders Information

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

The idea behind Qijing Machinery and Wonders Information 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.