Correlation Between Chison Medical and Qingdao Haier

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

Diversification Opportunities for Chison Medical and Qingdao Haier

0.21

Correlation Coefficient

Chison Medical  Qingdao Haier

Modest diversification

The 3 months correlation between Chison and Qingdao is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chison Medical Technologies and Qingdao Haier Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Haier Biomedical 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 Qingdao Haier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Haier Biomedical has no effect on the direction of Chison Medical i.e., Chison Medical and Qingdao Haier go up and down completely randomly.

Pair Corralation between Chison Medical and Qingdao Haier

Assuming the 90 days trading horizon Chison Medical Technologies is expected to generate 2.02 times more return on investment than Qingdao Haier. However, Chison Medical is 2.02 times more volatile than Qingdao Haier Biomedical. It trades about 0.11 of its potential returns per unit of risk. Qingdao Haier Biomedical is currently generating about -0.04 per unit of risk. If you would invest  2,495  in Chison Medical Technologies on December 25, 2024 and sell it today you would earn a total of  642.00  from holding Chison Medical Technologies or generate 25.73% return on investment over 90 days.

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

Chison Medical Technologies  vs.  Qingdao Haier Biomedical

Chison Medical Techn

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 8 (%) 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.

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.

Pair Trading with Chison Medical and Qingdao Haier

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

The idea behind Chison Medical Technologies and Qingdao Haier Biomedical 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.