Correlation Between Shenzhen Hifuture and Qumei Furniture
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By analyzing existing cross correlation between Shenzhen Hifuture Electric and Qumei Furniture Group, you can compare the effects of market volatilities on Shenzhen Hifuture and Qumei Furniture 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 Shenzhen Hifuture with a short position of Qumei Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Hifuture and Qumei Furniture.
Diversification Opportunities for Shenzhen Hifuture and Qumei Furniture
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Qumei is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hifuture Electric and Qumei Furniture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qumei Furniture Group and Shenzhen Hifuture 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 Shenzhen Hifuture Electric are associated (or correlated) with Qumei Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qumei Furniture Group has no effect on the direction of Shenzhen Hifuture i.e., Shenzhen Hifuture and Qumei Furniture go up and down completely randomly.
Pair Corralation between Shenzhen Hifuture and Qumei Furniture
Assuming the 90 days trading horizon Shenzhen Hifuture Electric is expected to under-perform the Qumei Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Hifuture Electric is 1.05 times less risky than Qumei Furniture. The stock trades about -0.24 of its potential returns per unit of risk. The Qumei Furniture Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 255.00 in Qumei Furniture Group on November 7, 2024 and sell it today you would earn a total of 28.00 from holding Qumei Furniture Group or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Hifuture Electric vs. Qumei Furniture Group
Performance |
| Timeline |
| Shenzhen Hifuture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Qumei Furniture Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shenzhen Hifuture and Qumei Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Hifuture and Qumei Furniture
The main advantage of trading using opposite Shenzhen Hifuture and Qumei Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Hifuture position performs unexpectedly, Qumei Furniture 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 Qumei Furniture will offset losses from the drop in Qumei Furniture's long position.| Shenzhen Hifuture vs. San Bian Science | Shenzhen Hifuture vs. Qingdao Tianneng Heavy | Shenzhen Hifuture vs. Baoding Tianwei Baobian | Shenzhen Hifuture vs. Shanghai Taisheng Wind |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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