Correlation Between Qi An and ROPEOK Technology

Can any of the company-specific risk be diversified away by investing in both Qi An and ROPEOK Technology 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 ROPEOK Technology 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 ROPEOK Technology Group, you can compare the effects of market volatilities on Qi An and ROPEOK Technology 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 ROPEOK Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qi An and ROPEOK Technology.

Diversification Opportunities for Qi An and ROPEOK Technology

0.32

Correlation Coefficient

Qi An  ROPEOK Technology

Weak diversification

The 3 months correlation between 688561 and ROPEOK is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Qi An Xin and ROPEOK Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROPEOK Technology 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 ROPEOK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROPEOK Technology has no effect on the direction of Qi An i.e., Qi An and ROPEOK Technology go up and down completely randomly.

Pair Corralation between Qi An and ROPEOK Technology

Assuming the 90 days trading horizon Qi An Xin is expected to under-perform the ROPEOK Technology. But the stock apears to be less risky and, when comparing its historical volatility, Qi An Xin is 1.09 times less risky than ROPEOK Technology. The stock trades about -0.2 of its potential returns per unit of risk. The ROPEOK Technology Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  927.00  in ROPEOK Technology Group on October 6, 2024 and sell it today you would lose (110.00) from holding ROPEOK Technology Group or give up 11.87% of portfolio value over 90 days.

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

Qi An Xin  vs.  ROPEOK Technology Group

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.

ROPEOK Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROPEOK Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Qi An and ROPEOK Technology

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

The idea behind Qi An Xin and ROPEOK Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.