Correlation Between Shanghai V and Qingdao Gon

Can any of the company-specific risk be diversified away by investing in both Shanghai V and Qingdao Gon 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 Shanghai V and Qingdao Gon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shanghai V Test Semiconductor and Qingdao Gon Technology, you can compare the effects of market volatilities on Shanghai V and Qingdao Gon 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 Shanghai V with a short position of Qingdao Gon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai V and Qingdao Gon.

Diversification Opportunities for Shanghai V and Qingdao Gon

0.25

Correlation Coefficient

Shanghai V  Qingdao Gon

Modest diversification

The 3 months correlation between Shanghai and Qingdao is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai V Test Semiconductor and Qingdao Gon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Gon Technology and Shanghai V 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 Shanghai V Test Semiconductor are associated (or correlated) with Qingdao Gon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Gon Technology has no effect on the direction of Shanghai V i.e., Shanghai V and Qingdao Gon go up and down completely randomly.

Pair Corralation between Shanghai V and Qingdao Gon

Assuming the 90 days trading horizon Shanghai V Test Semiconductor is expected to under-perform the Qingdao Gon. In addition to that, Shanghai V is 1.08 times more volatile than Qingdao Gon Technology. It trades about -0.15 of its total potential returns per unit of risk. Qingdao Gon Technology is currently generating about -0.12 per unit of volatility. If you would invest  2,328  in Qingdao Gon Technology on October 9, 2024 and sell it today you would lose (128.00) from holding Qingdao Gon Technology or give up 5.5% of portfolio value over 90 days.

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

Shanghai V Test Semiconductor  vs.  Qingdao Gon Technology

Shanghai V Test

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai V Test Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shanghai V is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qingdao Gon Technology

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Gon Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Qingdao Gon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shanghai V and Qingdao Gon

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

The idea behind Shanghai V Test Semiconductor and Qingdao Gon Technology 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.