Correlation Between China Resources and QT Imaging

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

By analyzing existing cross correlation between China Resources Beer and QT Imaging Holdings, you can compare the effects of market volatilities on China Resources and QT Imaging 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 Resources with a short position of QT Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and QT Imaging.

Diversification Opportunities for China Resources and QT Imaging

-0.13

Correlation Coefficient

China Resources  QT Imaging

Good diversification

The 3 months correlation between China and QTI is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and QT Imaging Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QT Imaging Holdings and China Resources 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 Resources Beer are associated (or correlated) with QT Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QT Imaging Holdings has no effect on the direction of China Resources i.e., China Resources and QT Imaging go up and down completely randomly.

Pair Corralation between China Resources and QT Imaging

Assuming the 90 days horizon China Resources is expected to generate 3.72 times less return on investment than QT Imaging. But when comparing it to its historical volatility, China Resources Beer is 1.67 times less risky than QT Imaging. It trades about 0.12 of its potential returns per unit of risk. QT Imaging Holdings is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  35.00  in QT Imaging Holdings on October 25, 2024 and sell it today you would earn a total of  17.00  from holding QT Imaging Holdings or generate 48.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

China Resources Beer  vs.  QT Imaging Holdings

China Resources Beer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Resources Beer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, China Resources reported solid returns over the last few months and may actually be approaching a breakup point.

QT Imaging Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QT Imaging Holdings 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 recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with China Resources and QT Imaging

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

The idea behind China Resources Beer and QT Imaging Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.