Correlation Between Chison Medical and Qumei Furniture

Can any of the company-specific risk be diversified away by investing in both Chison Medical and Qumei Furniture 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 Chison Medical and Qumei Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chison Medical Technologies and Qumei Furniture Group, you can compare the effects of market volatilities on Chison Medical and Qumei Furniture 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 Chison Medical with a short position of Qumei Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chison Medical and Qumei Furniture.

Diversification Opportunities for Chison Medical and Qumei Furniture

0.89

Correlation Coefficient

Chison Medical  Qumei Furniture

Very poor diversification

The 3 months correlation between Chison and Qumei is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Chison Medical Technologies and Qumei Furniture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qumei Furniture Group and Chison Medical 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 Chison Medical Technologies are associated (or correlated) with Qumei Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qumei Furniture Group has no effect on the direction of Chison Medical i.e., Chison Medical and Qumei Furniture go up and down completely randomly.

Pair Corralation between Chison Medical and Qumei Furniture

Assuming the 90 days trading horizon Chison Medical is expected to generate 1.26 times less return on investment than Qumei Furniture. In addition to that, Chison Medical is 1.03 times more volatile than Qumei Furniture Group. It trades about 0.15 of its total potential returns per unit of risk. Qumei Furniture Group is currently generating about 0.19 per unit of volatility. If you would invest  219.00  in Qumei Furniture Group on September 22, 2024 and sell it today you would earn a total of  109.00  from holding Qumei Furniture Group or generate 49.77% return on investment over 90 days.

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

Chison Medical Technologies  vs.  Qumei Furniture Group

Chison Medical Techn

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chison Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Qumei Furniture Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qumei Furniture Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qumei Furniture sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chison Medical and Qumei Furniture

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

The idea behind Chison Medical Technologies and Qumei Furniture 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.