Correlation Between Qilian International and Universe Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Qilian International and Universe Pharmaceuticals 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 Qilian International and Universe Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qilian International Holding and Universe Pharmaceuticals, you can compare the effects of market volatilities on Qilian International and Universe Pharmaceuticals 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 Qilian International with a short position of Universe Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qilian International and Universe Pharmaceuticals.

Diversification Opportunities for Qilian International and Universe Pharmaceuticals

-0.38

Correlation Coefficient

Qilian International  Universe Pharmaceuticals

Very good diversification

The 3 months correlation between Qilian and Universe is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Qilian International Holding and Universe Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universe Pharmaceuticals and Qilian International 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 Qilian International Holding are associated (or correlated) with Universe Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universe Pharmaceuticals has no effect on the direction of Qilian International i.e., Qilian International and Universe Pharmaceuticals go up and down completely randomly.

Pair Corralation between Qilian International and Universe Pharmaceuticals

Considering the 90-day investment horizon Qilian International Holding is expected to generate 0.19 times more return on investment than Universe Pharmaceuticals. However, Qilian International Holding is 5.28 times less risky than Universe Pharmaceuticals. It trades about 0.46 of its potential returns per unit of risk. Universe Pharmaceuticals is currently generating about -0.02 per unit of risk. If you would invest  712.00  in Qilian International Holding on September 14, 2024 and sell it today you would earn a total of  96.00  from holding Qilian International Holding or generate 13.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	7.94%
Values	Daily Returns

Qilian International Holding  vs.  Universe Pharmaceuticals

Qilian International

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Qilian International Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak essential indicators, Qilian International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Universe Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universe Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Qilian International and Universe Pharmaceuticals

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

The idea behind Qilian International Holding and Universe Pharmaceuticals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.