Correlation Between Qijing Machinery and Biwin Storage

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

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

Diversification Opportunities for Qijing Machinery and Biwin Storage

0.68

Correlation Coefficient

Qijing Machinery  Biwin Storage

Poor diversification

The 3 months correlation between Qijing and Biwin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Qijing Machinery and Biwin Storage Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biwin Storage Technology 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 Biwin Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biwin Storage Technology has no effect on the direction of Qijing Machinery i.e., Qijing Machinery and Biwin Storage go up and down completely randomly.

Pair Corralation between Qijing Machinery and Biwin Storage

Assuming the 90 days trading horizon Qijing Machinery is expected to generate 1.39 times more return on investment than Biwin Storage. However, Qijing Machinery is 1.39 times more volatile than Biwin Storage Technology. It trades about 0.28 of its potential returns per unit of risk. Biwin Storage Technology is currently generating about 0.05 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  1,253  from holding Qijing Machinery or generate 99.52% return on investment over 90 days.

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

Qijing Machinery  vs.  Biwin Storage Technology

Qijing Machinery

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qijing Machinery are ranked lower than 21 (%) 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.

Biwin Storage Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biwin Storage Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biwin Storage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Qijing Machinery and Biwin Storage

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

The idea behind Qijing Machinery and Biwin Storage 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.