Correlation Between QINGCI GAMES and Methode Electronics

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

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

Diversification Opportunities for QINGCI GAMES and Methode Electronics

-0.46

Correlation Coefficient

QINGCI GAMES  Methode Electronics

Very good diversification

The 3 months correlation between QINGCI and Methode is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding QINGCI GAMES INC and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and QINGCI GAMES 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 QINGCI GAMES INC are associated (or correlated) with Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of QINGCI GAMES i.e., QINGCI GAMES and Methode Electronics go up and down completely randomly.

Pair Corralation between QINGCI GAMES and Methode Electronics

Assuming the 90 days horizon QINGCI GAMES INC is expected to generate 0.98 times more return on investment than Methode Electronics. However, QINGCI GAMES INC is 1.02 times less risky than Methode Electronics. It trades about 0.07 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.22 per unit of risk. If you would invest  32.00  in QINGCI GAMES INC on December 22, 2024 and sell it today you would earn a total of  5.00  from holding QINGCI GAMES INC or generate 15.63% return on investment over 90 days.

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

QINGCI GAMES INC  vs.  Methode Electronics

QINGCI GAMES INC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QINGCI GAMES INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, QINGCI GAMES reported solid returns over the last few months and may actually be approaching a breakup point.

Methode Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Methode Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with QINGCI GAMES and Methode Electronics

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

The idea behind QINGCI GAMES INC and Methode Electronics 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.