Correlation Between Qingdao Haier and Qilu Bank

Can any of the company-specific risk be diversified away by investing in both Qingdao Haier and Qilu Bank 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 Qilu Bank 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 Qilu Bank Co, you can compare the effects of market volatilities on Qingdao Haier and Qilu Bank 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 Qilu Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Haier and Qilu Bank.

Diversification Opportunities for Qingdao Haier and Qilu Bank

-0.13

Correlation Coefficient

Qingdao Haier  Qilu Bank

Good diversification

The 3 months correlation between Qingdao and Qilu is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Haier Biomedical and Qilu Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilu Bank 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 Qilu Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qilu Bank has no effect on the direction of Qingdao Haier i.e., Qingdao Haier and Qilu Bank go up and down completely randomly.

Pair Corralation between Qingdao Haier and Qilu Bank

Assuming the 90 days trading horizon Qingdao Haier Biomedical is expected to under-perform the Qilu Bank. In addition to that, Qingdao Haier is 1.81 times more volatile than Qilu Bank Co. It trades about -0.04 of its total potential returns per unit of risk. Qilu Bank Co is currently generating about 0.05 per unit of volatility. If you would invest  394.00  in Qilu Bank Co on October 23, 2024 and sell it today you would earn a total of  166.00  from holding Qilu Bank Co or generate 42.13% return on investment over 90 days.

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

Qingdao Haier Biomedical  vs.  Qilu Bank Co

Qingdao Haier Biomedical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Haier Biomedical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Qilu Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qilu Bank Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Qilu Bank 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 Qilu Bank

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

The idea behind Qingdao Haier Biomedical and Qilu Bank 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.