Correlation Between Qinghaihuading Industrial and CITIC Metal

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

Diversification Opportunities for Qinghaihuading Industrial and CITIC Metal

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Qinghaihuading and CITIC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Qinghaihuading Industrial Co and CITIC Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Metal 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 CITIC Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Metal has no effect on the direction of Qinghaihuading Industrial i.e., Qinghaihuading Industrial and CITIC Metal go up and down completely randomly.

Pair Corralation between Qinghaihuading Industrial and CITIC Metal

Assuming the 90 days trading horizon Qinghaihuading Industrial Co is expected to generate 2.05 times more return on investment than CITIC Metal. However, Qinghaihuading Industrial is 2.05 times more volatile than CITIC Metal Co. It trades about 0.14 of its potential returns per unit of risk. CITIC Metal Co is currently generating about 0.05 per unit of risk. If you would invest  277.00  in Qinghaihuading Industrial Co on September 14, 2024 and sell it today you would earn a total of  224.00  from holding Qinghaihuading Industrial Co or generate 80.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Qinghaihuading Industrial Co  vs.  CITIC Metal Co

 Performance 
       Timeline  
Qinghaihuading Industrial 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Qinghaihuading Industrial Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qinghaihuading Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.
CITIC Metal 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Metal Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CITIC Metal sustained solid returns over the last few months and may actually be approaching a breakup point.

Qinghaihuading Industrial and CITIC Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Qinghaihuading Industrial and CITIC Metal

The main advantage of trading using opposite Qinghaihuading Industrial and CITIC Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qinghaihuading Industrial position performs unexpectedly, CITIC Metal 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 CITIC Metal will offset losses from the drop in CITIC Metal's long position.
The idea behind Qinghaihuading Industrial Co and CITIC Metal Co 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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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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