Correlation Between Chongqing Machinery and Qingling Motors
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Qingling Motors 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 Chongqing Machinery and Qingling Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and Qingling Motors Co, you can compare the effects of market volatilities on Chongqing Machinery and Qingling Motors 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 Chongqing Machinery with a short position of Qingling Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Qingling Motors.
Diversification Opportunities for Chongqing Machinery and Qingling Motors
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and Qingling is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Qingling Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingling Motors and Chongqing Machinery 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 Chongqing Machinery Electric are associated (or correlated) with Qingling Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingling Motors has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Qingling Motors go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Qingling Motors
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 1.62 times more return on investment than Qingling Motors. However, Chongqing Machinery is 1.62 times more volatile than Qingling Motors Co. It trades about -0.09 of its potential returns per unit of risk. Qingling Motors Co is currently generating about -0.16 per unit of risk. If you would invest 8.65 in Chongqing Machinery Electric on October 9, 2024 and sell it today you would lose (0.45) from holding Chongqing Machinery Electric or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Qingling Motors Co
Performance |
| Timeline |
| Chongqing Machinery |
| Qingling Motors |
Chongqing Machinery and Qingling Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Qingling Motors
The main advantage of trading using opposite Chongqing Machinery and Qingling Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Qingling Motors 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 Qingling Motors will offset losses from the drop in Qingling Motors' long position.| Chongqing Machinery vs. Superior Plus Corp | Chongqing Machinery vs. NMI Holdings | Chongqing Machinery vs. SIVERS SEMICONDUCTORS AB | Chongqing Machinery vs. Talanx AG |
| Qingling Motors vs. OPKO HEALTH | Qingling Motors vs. Phibro Animal Health | Qingling Motors vs. RCI Hospitality Holdings | Qingling Motors vs. CARDINAL 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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