Correlation Between Qijing Machinery and Beijing Roborock

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

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

Diversification Opportunities for Qijing Machinery and Beijing Roborock

-0.32

Correlation Coefficient

Qijing Machinery  Beijing Roborock

Very good diversification

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

Pair Corralation between Qijing Machinery and Beijing Roborock

Assuming the 90 days trading horizon Qijing Machinery is expected to generate 1.53 times less return on investment than Beijing Roborock. But when comparing it to its historical volatility, Qijing Machinery is 1.33 times less risky than Beijing Roborock. It trades about 0.02 of its potential returns per unit of risk. Beijing Roborock Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  17,488  in Beijing Roborock Technology on September 28, 2024 and sell it today you would earn a total of  3,614  from holding Beijing Roborock Technology or generate 20.67% 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.  Beijing Roborock Technology

Qijing Machinery

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qijing Machinery are ranked lower than 5 (%) 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.

Beijing Roborock Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Roborock Technology 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Qijing Machinery and Beijing Roborock

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

The idea behind Qijing Machinery and Beijing Roborock Technology 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..