Correlation Between Guangzhou KDT and Qijing Machinery
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By analyzing existing cross correlation between Guangzhou KDT Machinery and Qijing Machinery, you can compare the effects of market volatilities on Guangzhou KDT and Qijing Machinery 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 Guangzhou KDT with a short position of Qijing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou KDT and Qijing Machinery.
Diversification Opportunities for Guangzhou KDT and Qijing Machinery
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and Qijing is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KDT Machinery and Qijing Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qijing Machinery and Guangzhou KDT 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 Guangzhou KDT Machinery are associated (or correlated) with Qijing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qijing Machinery has no effect on the direction of Guangzhou KDT i.e., Guangzhou KDT and Qijing Machinery go up and down completely randomly.
Pair Corralation between Guangzhou KDT and Qijing Machinery
Assuming the 90 days trading horizon Guangzhou KDT Machinery is expected to under-perform the Qijing Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou KDT Machinery is 2.26 times less risky than Qijing Machinery. The stock trades about -0.47 of its potential returns per unit of risk. The Qijing Machinery is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,405 in Qijing Machinery on October 12, 2024 and sell it today you would lose (118.00) from holding Qijing Machinery or give up 8.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou KDT Machinery vs. Qijing Machinery
Performance |
| Timeline |
| Guangzhou KDT Machinery |
| Qijing Machinery |
Guangzhou KDT and Qijing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou KDT and Qijing Machinery
The main advantage of trading using opposite Guangzhou KDT and Qijing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou KDT position performs unexpectedly, Qijing Machinery 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 Qijing Machinery will offset losses from the drop in Qijing Machinery's long position.| Guangzhou KDT vs. Elite Color Environmental | Guangzhou KDT vs. Central Plains Environment | Guangzhou KDT vs. Changjiang Jinggong Steel | Guangzhou KDT vs. Hangzhou Guotai Environmental |
| Qijing Machinery vs. Biwin Storage Technology | Qijing Machinery vs. PetroChina Co Ltd | Qijing Machinery vs. Industrial and Commercial | Qijing Machinery vs. China Construction Bank |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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