Correlation Between Caterpillar and Qilian International
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Qilian International 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 Caterpillar and Qilian International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Qilian International Holding, you can compare the effects of market volatilities on Caterpillar and Qilian International 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 Caterpillar with a short position of Qilian International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Qilian International.
Diversification Opportunities for Caterpillar and Qilian International
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caterpillar and Qilian is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Qilian International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilian International and Caterpillar 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 Caterpillar are associated (or correlated) with Qilian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qilian International has no effect on the direction of Caterpillar i.e., Caterpillar and Qilian International go up and down completely randomly.
Pair Corralation between Caterpillar and Qilian International
If you would invest 39,061 in Caterpillar on August 28, 2024 and sell it today you would earn a total of 1,504 from holding Caterpillar or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.55% |
| Values | Daily Returns |
Caterpillar vs. Qilian International Holding
Performance |
| Timeline |
| Caterpillar |
| Qilian International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Caterpillar and Qilian International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Qilian International
The main advantage of trading using opposite Caterpillar and Qilian International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Qilian International 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 Qilian International will offset losses from the drop in Qilian International's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Qilian International vs. Painreform | Qilian International vs. Regencell Bioscience Holdings | Qilian International vs. Procaps Group SA | Qilian International vs. Phibro Animal Health |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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