Correlation Between Sinocat Environmental and Qilu Bank

Can any of the company-specific risk be diversified away by investing in both Sinocat Environmental and Qilu Bank 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 Sinocat Environmental and Qilu Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sinocat Environmental Technology and Qilu Bank Co, you can compare the effects of market volatilities on Sinocat Environmental and Qilu Bank 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 Sinocat Environmental with a short position of Qilu Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinocat Environmental and Qilu Bank.

Diversification Opportunities for Sinocat Environmental and Qilu Bank

0.48

Correlation Coefficient

Sinocat Environmental  Qilu Bank

Very weak diversification

The 3 months correlation between Sinocat and Qilu is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sinocat Environmental Technolo and Qilu Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilu Bank and Sinocat Environmental 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 Sinocat Environmental Technology are associated (or correlated) with Qilu Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qilu Bank has no effect on the direction of Sinocat Environmental i.e., Sinocat Environmental and Qilu Bank go up and down completely randomly.

Pair Corralation between Sinocat Environmental and Qilu Bank

Assuming the 90 days trading horizon Sinocat Environmental is expected to generate 1.17 times less return on investment than Qilu Bank. In addition to that, Sinocat Environmental is 1.96 times more volatile than Qilu Bank Co. It trades about 0.04 of its total potential returns per unit of risk. Qilu Bank Co is currently generating about 0.1 per unit of volatility. If you would invest  552.00  in Qilu Bank Co on December 30, 2024 and sell it today you would earn a total of  51.00  from holding Qilu Bank Co or generate 9.24% return on investment over 90 days.

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

Sinocat Environmental Technolo  vs.  Qilu Bank Co

Sinocat Environmental

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinocat Environmental Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinocat Environmental may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Qilu Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qilu Bank Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qilu Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sinocat Environmental and Qilu Bank

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

The idea behind Sinocat Environmental Technology and Qilu Bank Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.