Correlation Between Carnegie Clean and Qingling Motors

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

By analyzing existing cross correlation between Carnegie Clean Energy and Qingling Motors Co, you can compare the effects of market volatilities on Carnegie Clean and Qingling Motors 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 Carnegie Clean with a short position of Qingling Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and Qingling Motors.

Diversification Opportunities for Carnegie Clean and Qingling Motors

-0.22

Correlation Coefficient

Carnegie Clean  Qingling Motors

Very good diversification

The 3 months correlation between Carnegie and Qingling is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Qingling Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingling Motors and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Qingling Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingling Motors has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Qingling Motors go up and down completely randomly.

Pair Corralation between Carnegie Clean and Qingling Motors

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to under-perform the Qingling Motors. In addition to that, Carnegie Clean is 2.11 times more volatile than Qingling Motors Co. It trades about -0.02 of its total potential returns per unit of risk. Qingling Motors Co is currently generating about -0.03 per unit of volatility. If you would invest  6.70  in Qingling Motors Co on December 4, 2024 and sell it today you would lose (0.32) from holding Qingling Motors Co or give up 4.78% of portfolio value over 90 days.

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

Carnegie Clean Energy  vs.  Qingling Motors Co

Carnegie Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Carnegie Clean is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Qingling Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qingling Motors Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Qingling Motors is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carnegie Clean and Qingling Motors

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

The idea behind Carnegie Clean Energy and Qingling Motors 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.