Correlation Between China Railway and QUEEN S

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

By analyzing existing cross correlation between China Railway Signal and QUEEN S ROAD, you can compare the effects of market volatilities on China Railway and QUEEN S 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 Railway with a short position of QUEEN S. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and QUEEN S.

Diversification Opportunities for China Railway and QUEEN S

-0.05

Correlation Coefficient

China Railway  QUEEN S

Good diversification

The 3 months correlation between China and QUEEN is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Signal and QUEEN S ROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUEEN S ROAD and China Railway 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 Railway Signal are associated (or correlated) with QUEEN S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUEEN S ROAD has no effect on the direction of China Railway i.e., China Railway and QUEEN S go up and down completely randomly.

Pair Corralation between China Railway and QUEEN S

Assuming the 90 days horizon China Railway Signal is expected to generate 0.86 times more return on investment than QUEEN S. However, China Railway Signal is 1.17 times less risky than QUEEN S. It trades about 0.08 of its potential returns per unit of risk. QUEEN S ROAD is currently generating about -0.09 per unit of risk. If you would invest  38.00  in China Railway Signal on October 12, 2024 and sell it today you would earn a total of  1.00  from holding China Railway Signal or generate 2.63% return on investment over 90 days.

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

China Railway Signal  vs.  QUEEN S ROAD

China Railway Signal

Risk-Adjusted Performance

0 of 100

Insignificant

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

QUEEN S ROAD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QUEEN S ROAD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, QUEEN S may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with China Railway and QUEEN S

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

The idea behind China Railway Signal and QUEEN S ROAD 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.