Correlation Between Qijing Machinery and China Fortune

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

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

Diversification Opportunities for Qijing Machinery and China Fortune

-0.3

Correlation Coefficient

Qijing Machinery  China Fortune

Very good diversification

The 3 months correlation between Qijing and China is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Qijing Machinery and China Fortune Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fortune Land 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 China Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fortune Land has no effect on the direction of Qijing Machinery i.e., Qijing Machinery and China Fortune go up and down completely randomly.

Pair Corralation between Qijing Machinery and China Fortune

Assuming the 90 days trading horizon Qijing Machinery is expected to generate 1.5 times more return on investment than China Fortune. However, Qijing Machinery is 1.5 times more volatile than China Fortune Land. It trades about 0.23 of its potential returns per unit of risk. China Fortune Land is currently generating about -0.12 per unit of risk. If you would invest  1,257  in Qijing Machinery on December 26, 2024 and sell it today you would earn a total of  1,004  from holding Qijing Machinery or generate 79.87% return on investment over 90 days.

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

Qijing Machinery  vs.  China Fortune Land

Qijing Machinery

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qijing Machinery are ranked lower than 18 (%) 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.

China Fortune Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Fortune Land 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Qijing Machinery and China Fortune

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

The idea behind Qijing Machinery and China Fortune Land 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.