Correlation Between Guangdong Cellwise and Qtone Education

Can any of the company-specific risk be diversified away by investing in both Guangdong Cellwise and Qtone Education 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 Guangdong Cellwise and Qtone Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangdong Cellwise Microelectronics and Qtone Education Group, you can compare the effects of market volatilities on Guangdong Cellwise and Qtone Education 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 Guangdong Cellwise with a short position of Qtone Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Cellwise and Qtone Education.

Diversification Opportunities for Guangdong Cellwise and Qtone Education

0.65

Correlation Coefficient

Guangdong Cellwise  Qtone Education

Poor diversification

The 3 months correlation between Guangdong and Qtone is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Cellwise Microelectr and Qtone Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qtone Education Group and Guangdong Cellwise 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 Guangdong Cellwise Microelectronics are associated (or correlated) with Qtone Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qtone Education Group has no effect on the direction of Guangdong Cellwise i.e., Guangdong Cellwise and Qtone Education go up and down completely randomly.

Pair Corralation between Guangdong Cellwise and Qtone Education

Assuming the 90 days trading horizon Guangdong Cellwise Microelectronics is expected to generate 0.78 times more return on investment than Qtone Education. However, Guangdong Cellwise Microelectronics is 1.29 times less risky than Qtone Education. It trades about 0.03 of its potential returns per unit of risk. Qtone Education Group is currently generating about -0.27 per unit of risk. If you would invest  4,925  in Guangdong Cellwise Microelectronics on October 4, 2024 and sell it today you would earn a total of  35.00  from holding Guangdong Cellwise Microelectronics or generate 0.71% return on investment over 90 days.

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

Guangdong Cellwise Microelectr  vs.  Qtone Education Group

Guangdong Cellwise

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Cellwise Microelectronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Cellwise may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Qtone Education Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qtone Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Guangdong Cellwise and Qtone Education

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

The idea behind Guangdong Cellwise Microelectronics and Qtone Education Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.