Correlation Between AGRICULTBK HADR25 and Qingling Motors

Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR25 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 AGRICULTBK HADR25 and Qingling Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGRICULTBK HADR25 YC and Qingling Motors Co, you can compare the effects of market volatilities on AGRICULTBK HADR25 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 AGRICULTBK HADR25 with a short position of Qingling Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR25 and Qingling Motors.

Diversification Opportunities for AGRICULTBK HADR25 and Qingling Motors

0.26

Correlation Coefficient

AGRICULTBK HADR25  Qingling Motors

Modest diversification

The 3 months correlation between AGRICULTBK and Qingling is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and Qingling Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingling Motors and AGRICULTBK HADR25 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 AGRICULTBK HADR25 YC 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 AGRICULTBK HADR25 i.e., AGRICULTBK HADR25 and Qingling Motors go up and down completely randomly.

Pair Corralation between AGRICULTBK HADR25 and Qingling Motors

Assuming the 90 days trading horizon AGRICULTBK HADR25 YC is expected to generate 1.19 times more return on investment than Qingling Motors. However, AGRICULTBK HADR25 is 1.19 times more volatile than Qingling Motors Co. It trades about 0.25 of its potential returns per unit of risk. Qingling Motors Co is currently generating about -0.16 per unit of risk. If you would invest  1,162  in AGRICULTBK HADR25 YC on October 9, 2024 and sell it today you would earn a total of  108.00  from holding AGRICULTBK HADR25 YC or generate 9.29% return on investment over 90 days.

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

AGRICULTBK HADR25 YC  vs.  Qingling Motors Co

AGRICULTBK HADR25

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGRICULTBK HADR25 YC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGRICULTBK HADR25 reported solid returns over the last few months and may actually be approaching a breakup point.

Qingling Motors

Risk-Adjusted Performance

0 of 100

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 AGRICULTBK HADR25 and Qingling Motors

The main advantage of trading using opposite AGRICULTBK HADR25 and Qingling Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR25 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 AGRICULTBK HADR25 YC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..