Correlation Between LIFE + and Qingdao Port
Can any of the company-specific risk be diversified away by investing in both LIFE + and Qingdao Port 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 LIFE + and Qingdao Port into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFE BANC SPLIT and Qingdao Port International, you can compare the effects of market volatilities on LIFE + and Qingdao Port 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 LIFE + with a short position of Qingdao Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE + and Qingdao Port.
Diversification Opportunities for LIFE + and Qingdao Port
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LIFE and Qingdao is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and Qingdao Port International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Port Interna and LIFE + 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 LIFE BANC SPLIT are associated (or correlated) with Qingdao Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Port Interna has no effect on the direction of LIFE + i.e., LIFE + and Qingdao Port go up and down completely randomly.
Pair Corralation between LIFE + and Qingdao Port
Assuming the 90 days horizon LIFE + is expected to generate 1.23 times less return on investment than Qingdao Port. But when comparing it to its historical volatility, LIFE BANC SPLIT is 1.54 times less risky than Qingdao Port. It trades about 0.25 of its potential returns per unit of risk. Qingdao Port International is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Qingdao Port International on September 2, 2024 and sell it today you would earn a total of 11.00 from holding Qingdao Port International or generate 20.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFE BANC SPLIT vs. Qingdao Port International
Performance |
| Timeline |
| LIFE BANC SPLIT |
| Qingdao Port Interna |
LIFE + and Qingdao Port Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFE + and Qingdao Port
The main advantage of trading using opposite LIFE + and Qingdao Port positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE + position performs unexpectedly, Qingdao Port 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 Port will offset losses from the drop in Qingdao Port's long position.The idea behind LIFE BANC SPLIT and Qingdao Port International 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.| Qingdao Port vs. URBAN OUTFITTERS | Qingdao Port vs. Wyndham Hotels Resorts | Qingdao Port vs. American Eagle Outfitters | Qingdao Port vs. Park Hotels Resorts |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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