Correlation Between Qingdao Haier and Zhuhai Comleader

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

Diversification Opportunities for Qingdao Haier and Zhuhai Comleader

0.42

Correlation Coefficient

Qingdao Haier  Zhuhai Comleader

Very weak diversification

The 3 months correlation between Qingdao and Zhuhai is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Haier Biomedical and Zhuhai Comleader Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuhai Comleader Inf 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 Zhuhai Comleader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuhai Comleader Inf has no effect on the direction of Qingdao Haier i.e., Qingdao Haier and Zhuhai Comleader go up and down completely randomly.

Pair Corralation between Qingdao Haier and Zhuhai Comleader

Assuming the 90 days trading horizon Qingdao Haier Biomedical is expected to generate 0.5 times more return on investment than Zhuhai Comleader. However, Qingdao Haier Biomedical is 2.0 times less risky than Zhuhai Comleader. It trades about 0.18 of its potential returns per unit of risk. Zhuhai Comleader Information is currently generating about -0.32 per unit of risk. If you would invest  3,318  in Qingdao Haier Biomedical on October 8, 2024 and sell it today you would earn a total of  202.00  from holding Qingdao Haier Biomedical or generate 6.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Qingdao Haier Biomedical  vs.  Zhuhai Comleader Information

Qingdao Haier Biomedical

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Zhuhai Comleader Inf

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Qingdao Haier Biomedical and Zhuhai Comleader Information 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.