Correlation Between Q2M Managementberatu and Anhui Conch

Can any of the company-specific risk be diversified away by investing in both Q2M Managementberatu and Anhui Conch 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 Q2M Managementberatu and Anhui Conch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Q2M Managementberatung AG and Anhui Conch Cement, you can compare the effects of market volatilities on Q2M Managementberatu and Anhui Conch 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 Q2M Managementberatu with a short position of Anhui Conch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q2M Managementberatu and Anhui Conch.

Diversification Opportunities for Q2M Managementberatu and Anhui Conch

0.52

Correlation Coefficient

Q2M Managementberatu  Anhui Conch

Very weak diversification

The 3 months correlation between Q2M and Anhui is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Q2M Managementberatung AG and Anhui Conch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Conch Cement and Q2M Managementberatu 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 Q2M Managementberatung AG are associated (or correlated) with Anhui Conch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Conch Cement has no effect on the direction of Q2M Managementberatu i.e., Q2M Managementberatu and Anhui Conch go up and down completely randomly.

Pair Corralation between Q2M Managementberatu and Anhui Conch

Assuming the 90 days trading horizon Q2M Managementberatung AG is expected to under-perform the Anhui Conch. But the stock apears to be less risky and, when comparing its historical volatility, Q2M Managementberatung AG is 2.08 times less risky than Anhui Conch. The stock trades about -0.51 of its potential returns per unit of risk. The Anhui Conch Cement is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  253.00  in Anhui Conch Cement on October 8, 2024 and sell it today you would lose (22.00) from holding Anhui Conch Cement or give up 8.7% of portfolio value over 90 days.

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

Q2M Managementberatung AG  vs.  Anhui Conch Cement

Q2M Managementberatung

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Q2M Managementberatung AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Anhui Conch Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Conch Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

Pair Trading with Q2M Managementberatu and Anhui Conch

The main advantage of trading using opposite Q2M Managementberatu and Anhui Conch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q2M Managementberatu position performs unexpectedly, Anhui Conch 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 Anhui Conch will offset losses from the drop in Anhui Conch's long position.

The idea behind Q2M Managementberatung AG and Anhui Conch Cement 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.