Correlation Between Qi An and Shanghai Newtouch

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

By analyzing existing cross correlation between Qi An Xin and Shanghai Newtouch Software, you can compare the effects of market volatilities on Qi An and Shanghai Newtouch 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 Qi An with a short position of Shanghai Newtouch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qi An and Shanghai Newtouch.

Diversification Opportunities for Qi An and Shanghai Newtouch

0.36

Correlation Coefficient

Qi An  Shanghai Newtouch

Weak diversification

The 3 months correlation between 688561 and Shanghai is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Qi An Xin and Shanghai Newtouch Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Newtouch and Qi An 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 Qi An Xin are associated (or correlated) with Shanghai Newtouch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Newtouch has no effect on the direction of Qi An i.e., Qi An and Shanghai Newtouch go up and down completely randomly.

Pair Corralation between Qi An and Shanghai Newtouch

Assuming the 90 days trading horizon Qi An Xin is expected to under-perform the Shanghai Newtouch. But the stock apears to be less risky and, when comparing its historical volatility, Qi An Xin is 1.79 times less risky than Shanghai Newtouch. The stock trades about -0.17 of its potential returns per unit of risk. The Shanghai Newtouch Software is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,465  in Shanghai Newtouch Software on October 25, 2024 and sell it today you would lose (25.00) from holding Shanghai Newtouch Software or give up 1.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Qi An Xin  vs.  Shanghai Newtouch Software

Qi An Xin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qi An Xin 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.

Shanghai Newtouch

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Newtouch Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai Newtouch is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qi An and Shanghai Newtouch

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

The idea behind Qi An Xin and Shanghai Newtouch Software 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.