Correlation Between Qumei Furniture and Keda Clean

Can any of the company-specific risk be diversified away by investing in both Qumei Furniture and Keda Clean 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 Keda Clean 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 Keda Clean Energy, you can compare the effects of market volatilities on Qumei Furniture and Keda Clean 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 Keda Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qumei Furniture and Keda Clean.

Diversification Opportunities for Qumei Furniture and Keda Clean

0.27

Correlation Coefficient

Qumei Furniture  Keda Clean

Modest diversification

The 3 months correlation between Qumei and Keda is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Qumei Furniture Group and Keda Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keda Clean Energy 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 Keda Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keda Clean Energy has no effect on the direction of Qumei Furniture i.e., Qumei Furniture and Keda Clean go up and down completely randomly.

Pair Corralation between Qumei Furniture and Keda Clean

Assuming the 90 days trading horizon Qumei Furniture Group is expected to generate 1.9 times more return on investment than Keda Clean. However, Qumei Furniture is 1.9 times more volatile than Keda Clean Energy. It trades about 0.03 of its potential returns per unit of risk. Keda Clean Energy is currently generating about 0.0 per unit of risk. If you would invest  298.00  in Qumei Furniture Group on December 24, 2024 and sell it today you would earn a total of  10.00  from holding Qumei Furniture Group or generate 3.36% return on investment over 90 days.

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

Qumei Furniture Group  vs.  Keda Clean Energy

Qumei Furniture Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qumei Furniture Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Qumei Furniture is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Keda Clean Energy

Risk-Adjusted Performance

Weak

Over the last 90 days Keda Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Keda Clean 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 Keda Clean

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

The idea behind Qumei Furniture Group and Keda Clean Energy 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.