Correlation Between China New and Qiagen NV

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

By analyzing existing cross correlation between China New Energy and Qiagen NV, you can compare the effects of market volatilities on China New and Qiagen NV 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 China New with a short position of Qiagen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of China New and Qiagen NV.

Diversification Opportunities for China New and Qiagen NV

-0.17

Correlation Coefficient

China New  Qiagen NV

Good diversification

The 3 months correlation between China and Qiagen is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding China New Energy and Qiagen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiagen NV and China New 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 China New Energy are associated (or correlated) with Qiagen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiagen NV has no effect on the direction of China New i.e., China New and Qiagen NV go up and down completely randomly.

Pair Corralation between China New and Qiagen NV

Given the investment horizon of 90 days China New Energy is expected to generate 37.44 times more return on investment than Qiagen NV. However, China New is 37.44 times more volatile than Qiagen NV. It trades about 0.1 of its potential returns per unit of risk. Qiagen NV is currently generating about -0.11 per unit of risk. If you would invest  0.40  in China New Energy on October 12, 2024 and sell it today you would earn a total of  0.00  from holding China New Energy or generate 0.0% return on investment over 90 days.

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

China New Energy  vs.  Qiagen NV

China New Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China New Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, China New reported solid returns over the last few months and may actually be approaching a breakup point.

Qiagen NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qiagen NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Qiagen NV is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with China New and Qiagen NV

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

The idea behind China New Energy and Qiagen NV 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.