Correlation Between Madison Square and QINGCI GAMES

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

By analyzing existing cross correlation between Madison Square Garden and QINGCI GAMES INC, you can compare the effects of market volatilities on Madison Square and QINGCI GAMES 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 Madison Square with a short position of QINGCI GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and QINGCI GAMES.

Diversification Opportunities for Madison Square and QINGCI GAMES

-0.43

Correlation Coefficient

Madison Square  QINGCI GAMES

Very good diversification

The 3 months correlation between Madison and QINGCI is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and QINGCI GAMES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QINGCI GAMES INC and Madison Square 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 Madison Square Garden are associated (or correlated) with QINGCI GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QINGCI GAMES INC has no effect on the direction of Madison Square i.e., Madison Square and QINGCI GAMES go up and down completely randomly.

Pair Corralation between Madison Square and QINGCI GAMES

Assuming the 90 days horizon Madison Square Garden is expected to under-perform the QINGCI GAMES. But the stock apears to be less risky and, when comparing its historical volatility, Madison Square Garden is 3.04 times less risky than QINGCI GAMES. The stock trades about -0.13 of its potential returns per unit of risk. The QINGCI GAMES INC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  35.00  in QINGCI GAMES INC on December 29, 2024 and sell it today you would lose (1.00) from holding QINGCI GAMES INC or give up 2.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Madison Square Garden  vs.  QINGCI GAMES INC

Madison Square Garden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Madison Square Garden has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

QINGCI GAMES INC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Madison Square and QINGCI GAMES

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

The idea behind Madison Square Garden and QINGCI GAMES INC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.