Correlation Between Beijing HuaYuanYiTong and Qumei Furniture
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By analyzing existing cross correlation between Beijing HuaYuanYiTong Thermal and Qumei Furniture Group, you can compare the effects of market volatilities on Beijing HuaYuanYiTong 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 Beijing HuaYuanYiTong with a short position of Qumei Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing HuaYuanYiTong and Qumei Furniture.
Diversification Opportunities for Beijing HuaYuanYiTong and Qumei Furniture
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Beijing and Qumei is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Beijing HuaYuanYiTong Thermal 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 Beijing HuaYuanYiTong 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 Beijing HuaYuanYiTong Thermal 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 Beijing HuaYuanYiTong i.e., Beijing HuaYuanYiTong and Qumei Furniture go up and down completely randomly.
Pair Corralation between Beijing HuaYuanYiTong and Qumei Furniture
Assuming the 90 days trading horizon Beijing HuaYuanYiTong is expected to generate 1.34 times less return on investment than Qumei Furniture. In addition to that, Beijing HuaYuanYiTong is 1.16 times more volatile than Qumei Furniture Group. It trades about 0.14 of its total potential returns per unit of risk. Qumei Furniture Group is currently generating about 0.21 per unit of volatility. If you would invest 297.00 in Qumei Furniture Group on September 5, 2024 and sell it today you would earn a total of 39.00 from holding Qumei Furniture Group or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Beijing HuaYuanYiTong Thermal vs. Qumei Furniture Group
Performance |
| Timeline |
| Beijing HuaYuanYiTong |
| Qumei Furniture Group |
Beijing HuaYuanYiTong and Qumei Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing HuaYuanYiTong and Qumei Furniture
The main advantage of trading using opposite Beijing HuaYuanYiTong and Qumei Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing HuaYuanYiTong 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.The idea behind Beijing HuaYuanYiTong Thermal and Qumei Furniture Group 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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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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