Correlation Between Qingdao Haier and Changzhou Almaden

Can any of the company-specific risk be diversified away by investing in both Qingdao Haier and Changzhou Almaden 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 Qingdao Haier and Changzhou Almaden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qingdao Haier Biomedical and Changzhou Almaden Co, you can compare the effects of market volatilities on Qingdao Haier and Changzhou Almaden 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 Qingdao Haier with a short position of Changzhou Almaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Haier and Changzhou Almaden.

Diversification Opportunities for Qingdao Haier and Changzhou Almaden

0.67

Correlation Coefficient

Qingdao Haier  Changzhou Almaden

Poor diversification

The 3 months correlation between Qingdao and Changzhou is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Haier Biomedical and Changzhou Almaden Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changzhou Almaden and Qingdao Haier 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 Qingdao Haier Biomedical are associated (or correlated) with Changzhou Almaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changzhou Almaden has no effect on the direction of Qingdao Haier i.e., Qingdao Haier and Changzhou Almaden go up and down completely randomly.

Pair Corralation between Qingdao Haier and Changzhou Almaden

Assuming the 90 days trading horizon Qingdao Haier Biomedical is expected to under-perform the Changzhou Almaden. In addition to that, Qingdao Haier is 1.33 times more volatile than Changzhou Almaden Co. It trades about -0.01 of its total potential returns per unit of risk. Changzhou Almaden Co is currently generating about -0.01 per unit of volatility. If you would invest  1,596  in Changzhou Almaden Co on December 27, 2024 and sell it today you would lose (32.00) from holding Changzhou Almaden Co or give up 2.01% of portfolio value over 90 days.

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

Qingdao Haier Biomedical  vs.  Changzhou Almaden Co

Qingdao Haier Biomedical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qingdao Haier Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qingdao Haier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Changzhou Almaden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Changzhou Almaden Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Changzhou Almaden is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qingdao Haier and Changzhou Almaden

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

The idea behind Qingdao Haier Biomedical and Changzhou Almaden Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.