Correlation Between EuropaCorp and Qingdao Port

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

By analyzing existing cross correlation between EuropaCorp and Qingdao Port International, you can compare the effects of market volatilities on EuropaCorp and Qingdao Port 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 EuropaCorp with a short position of Qingdao Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuropaCorp and Qingdao Port.

Diversification Opportunities for EuropaCorp and Qingdao Port

-0.74

Correlation Coefficient

EuropaCorp  Qingdao Port

Pay attention - limited upside

The 3 months correlation between EuropaCorp and Qingdao is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding EuropaCorp and Qingdao Port International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Port Interna and EuropaCorp 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 EuropaCorp are associated (or correlated) with Qingdao Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Port Interna has no effect on the direction of EuropaCorp i.e., EuropaCorp and Qingdao Port go up and down completely randomly.

Pair Corralation between EuropaCorp and Qingdao Port

Assuming the 90 days horizon EuropaCorp is expected to under-perform the Qingdao Port. But the stock apears to be less risky and, when comparing its historical volatility, EuropaCorp is 1.15 times less risky than Qingdao Port. The stock trades about -0.24 of its potential returns per unit of risk. The Qingdao Port International is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Qingdao Port International on September 13, 2024 and sell it today you would earn a total of  17.00  from holding Qingdao Port International or generate 34.0% return on investment over 90 days.

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

EuropaCorp  vs.  Qingdao Port International

EuropaCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EuropaCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Qingdao Port Interna

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Port International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Qingdao Port reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EuropaCorp and Qingdao Port

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

The idea behind EuropaCorp and Qingdao Port International 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.