Correlation Between Qumei Furniture and Shenzhen Hans

Can any of the company-specific risk be diversified away by investing in both Qumei Furniture and Shenzhen Hans 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 Qumei Furniture and Shenzhen Hans into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qumei Furniture Group and Shenzhen Hans CNC, you can compare the effects of market volatilities on Qumei Furniture and Shenzhen Hans 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 Qumei Furniture with a short position of Shenzhen Hans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qumei Furniture and Shenzhen Hans.

Diversification Opportunities for Qumei Furniture and Shenzhen Hans

0.61

Correlation Coefficient

Qumei Furniture  Shenzhen Hans

Poor diversification

The 3 months correlation between Qumei and Shenzhen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Qumei Furniture Group and Shenzhen Hans CNC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Hans CNC and Qumei Furniture 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 Qumei Furniture Group are associated (or correlated) with Shenzhen Hans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Hans CNC has no effect on the direction of Qumei Furniture i.e., Qumei Furniture and Shenzhen Hans go up and down completely randomly.

Pair Corralation between Qumei Furniture and Shenzhen Hans

Assuming the 90 days trading horizon Qumei Furniture Group is expected to under-perform the Shenzhen Hans. In addition to that, Qumei Furniture is 1.19 times more volatile than Shenzhen Hans CNC. It trades about -0.06 of its total potential returns per unit of risk. Shenzhen Hans CNC is currently generating about 0.0 per unit of volatility. If you would invest  3,840  in Shenzhen Hans CNC on October 11, 2024 and sell it today you would lose (435.00) from holding Shenzhen Hans CNC or give up 11.33% of portfolio value over 90 days.

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

Qumei Furniture Group  vs.  Shenzhen Hans CNC

Qumei Furniture Group

Risk-Adjusted Performance

3 of 100

Insignificant

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

Shenzhen Hans CNC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Hans CNC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen Hans is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qumei Furniture and Shenzhen Hans

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

The idea behind Qumei Furniture Group and Shenzhen Hans CNC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.