Correlation Between Qingdao Foods and Suzhou Weizhixiang

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Can any of the company-specific risk be diversified away by investing in both Qingdao Foods and Suzhou Weizhixiang 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 Qingdao Foods and Suzhou Weizhixiang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qingdao Foods Co and Suzhou Weizhixiang Food, you can compare the effects of market volatilities on Qingdao Foods and Suzhou Weizhixiang 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 Qingdao Foods with a short position of Suzhou Weizhixiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Foods and Suzhou Weizhixiang.

Diversification Opportunities for Qingdao Foods and Suzhou Weizhixiang

QingdaoSuzhouDiversified AwayQingdaoSuzhouDiversified Away100%
0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Qingdao and Suzhou is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Foods Co and Suzhou Weizhixiang Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Weizhixiang Food and Qingdao Foods 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 Qingdao Foods Co are associated (or correlated) with Suzhou Weizhixiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Weizhixiang Food has no effect on the direction of Qingdao Foods i.e., Qingdao Foods and Suzhou Weizhixiang go up and down completely randomly.

Pair Corralation between Qingdao Foods and Suzhou Weizhixiang

Assuming the 90 days trading horizon Qingdao Foods Co is expected to under-perform the Suzhou Weizhixiang. But the stock apears to be less risky and, when comparing its historical volatility, Qingdao Foods Co is 2.21 times less risky than Suzhou Weizhixiang. The stock trades about -0.24 of its potential returns per unit of risk. The Suzhou Weizhixiang Food is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,416  in Suzhou Weizhixiang Food on November 17, 2024 and sell it today you would earn a total of  209.00  from holding Suzhou Weizhixiang Food or generate 8.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Qingdao Foods Co  vs.  Suzhou Weizhixiang Food

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025 -10010203040
JavaScript chart by amCharts 3.21.15001219 605089
       Timeline  
Qingdao Foods 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Qingdao Foods Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qingdao Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1314151617
Suzhou Weizhixiang Food 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Suzhou Weizhixiang Food are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suzhou Weizhixiang sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb222426283032

Qingdao Foods and Suzhou Weizhixiang Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.29-3.21-2.13-1.060.01.02.023.044.06 0.0300.0350.0400.0450.0500.055
JavaScript chart by amCharts 3.21.15001219 605089
       Returns  

Pair Trading with Qingdao Foods and Suzhou Weizhixiang

The main advantage of trading using opposite Qingdao Foods and Suzhou Weizhixiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qingdao Foods position performs unexpectedly, Suzhou Weizhixiang 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 Suzhou Weizhixiang will offset losses from the drop in Suzhou Weizhixiang's long position.
The idea behind Qingdao Foods Co and Suzhou Weizhixiang Food 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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