Correlation Between Bank of Communications and Qijing Machinery
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By analyzing existing cross correlation between Bank of Communications and Qijing Machinery, you can compare the effects of market volatilities on Bank of Communications 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 Bank of Communications with a short position of Qijing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Communications and Qijing Machinery.
Diversification Opportunities for Bank of Communications and Qijing Machinery
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Qijing is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Communications and Qijing Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qijing Machinery and Bank of Communications 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 Bank of Communications 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 Bank of Communications i.e., Bank of Communications and Qijing Machinery go up and down completely randomly.
Pair Corralation between Bank of Communications and Qijing Machinery
Assuming the 90 days trading horizon Bank of Communications is expected to generate 3.86 times less return on investment than Qijing Machinery. But when comparing it to its historical volatility, Bank of Communications is 1.59 times less risky than Qijing Machinery. It trades about 0.07 of its potential returns per unit of risk. Qijing Machinery is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,020 in Qijing Machinery on September 3, 2024 and sell it today you would earn a total of 299.00 from holding Qijing Machinery or generate 29.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Communications vs. Qijing Machinery
Performance |
| Timeline |
| Bank of Communications |
| Qijing Machinery |
Bank of Communications and Qijing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Communications and Qijing Machinery
The main advantage of trading using opposite Bank of Communications and Qijing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Communications 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.The idea behind Bank of Communications and Qijing Machinery 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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