Correlation Between Qinghaihuading Industrial and Aba Chemicals
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By analyzing existing cross correlation between Qinghaihuading Industrial Co and Aba Chemicals Corp, you can compare the effects of market volatilities on Qinghaihuading Industrial and Aba Chemicals 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 Qinghaihuading Industrial with a short position of Aba Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qinghaihuading Industrial and Aba Chemicals.
Diversification Opportunities for Qinghaihuading Industrial and Aba Chemicals
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Qinghaihuading and Aba is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Qinghaihuading Industrial Co and Aba Chemicals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aba Chemicals Corp and Qinghaihuading Industrial 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 Qinghaihuading Industrial Co are associated (or correlated) with Aba Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aba Chemicals Corp has no effect on the direction of Qinghaihuading Industrial i.e., Qinghaihuading Industrial and Aba Chemicals go up and down completely randomly.
Pair Corralation between Qinghaihuading Industrial and Aba Chemicals
Assuming the 90 days trading horizon Qinghaihuading Industrial Co is expected to generate 1.74 times more return on investment than Aba Chemicals. However, Qinghaihuading Industrial is 1.74 times more volatile than Aba Chemicals Corp. It trades about 0.15 of its potential returns per unit of risk. Aba Chemicals Corp is currently generating about -0.17 per unit of risk. If you would invest 460.00 in Qinghaihuading Industrial Co on September 13, 2024 and sell it today you would earn a total of 64.00 from holding Qinghaihuading Industrial Co or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qinghaihuading Industrial Co vs. Aba Chemicals Corp
Performance |
| Timeline |
| Qinghaihuading Industrial |
| Aba Chemicals Corp |
Qinghaihuading Industrial and Aba Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qinghaihuading Industrial and Aba Chemicals
The main advantage of trading using opposite Qinghaihuading Industrial and Aba Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qinghaihuading Industrial position performs unexpectedly, Aba Chemicals 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 Aba Chemicals will offset losses from the drop in Aba Chemicals' long position.The idea behind Qinghaihuading Industrial Co and Aba Chemicals Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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