Correlation Between Kweichow Moutai and Qingdao Hi

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Can any of the company-specific risk be diversified away by investing in both Kweichow Moutai and Qingdao Hi 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 Kweichow Moutai and Qingdao Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kweichow Moutai Co and Qingdao Hi Tech Moulds, you can compare the effects of market volatilities on Kweichow Moutai and Qingdao Hi 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 Kweichow Moutai with a short position of Qingdao Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kweichow Moutai and Qingdao Hi.

Diversification Opportunities for Kweichow Moutai and Qingdao Hi

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Kweichow and Qingdao is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kweichow Moutai Co and Qingdao Hi Tech Moulds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Hi Tech and Kweichow Moutai 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 Kweichow Moutai Co are associated (or correlated) with Qingdao Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Hi Tech has no effect on the direction of Kweichow Moutai i.e., Kweichow Moutai and Qingdao Hi go up and down completely randomly.

Pair Corralation between Kweichow Moutai and Qingdao Hi

Assuming the 90 days trading horizon Kweichow Moutai Co is expected to generate 0.46 times more return on investment than Qingdao Hi. However, Kweichow Moutai Co is 2.2 times less risky than Qingdao Hi. It trades about 0.03 of its potential returns per unit of risk. Qingdao Hi Tech Moulds is currently generating about -0.12 per unit of risk. If you would invest  151,800  in Kweichow Moutai Co on September 29, 2024 and sell it today you would earn a total of  1,097  from holding Kweichow Moutai Co or generate 0.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Kweichow Moutai Co  vs.  Qingdao Hi Tech Moulds

 Performance 
       Timeline  
Kweichow Moutai 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kweichow Moutai Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Qingdao Hi Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Qingdao Hi Tech Moulds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qingdao Hi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kweichow Moutai and Qingdao Hi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kweichow Moutai and Qingdao Hi

The main advantage of trading using opposite Kweichow Moutai and Qingdao Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kweichow Moutai position performs unexpectedly, Qingdao Hi 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 Qingdao Hi will offset losses from the drop in Qingdao Hi's long position.
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The idea behind Kweichow Moutai Co and Qingdao Hi Tech Moulds 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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