Correlation Between QBE Insurance and CHINA EAST
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and CHINA EAST 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 QBE Insurance and CHINA EAST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QBE Insurance Group and CHINA EAST ED, you can compare the effects of market volatilities on QBE Insurance and CHINA EAST 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 QBE Insurance with a short position of CHINA EAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and CHINA EAST.
Diversification Opportunities for QBE Insurance and CHINA EAST
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between QBE and CHINA is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and CHINA EAST ED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EAST ED and QBE Insurance 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 QBE Insurance Group are associated (or correlated) with CHINA EAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EAST ED has no effect on the direction of QBE Insurance i.e., QBE Insurance and CHINA EAST go up and down completely randomly.
Pair Corralation between QBE Insurance and CHINA EAST
Assuming the 90 days horizon QBE Insurance is expected to generate 1.2 times less return on investment than CHINA EAST. But when comparing it to its historical volatility, QBE Insurance Group is 2.22 times less risky than CHINA EAST. It trades about 0.14 of its potential returns per unit of risk. CHINA EAST ED is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 25.00 in CHINA EAST ED on October 18, 2024 and sell it today you would earn a total of 4.00 from holding CHINA EAST ED or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. CHINA EAST ED
Performance |
| Timeline |
| QBE Insurance Group |
| CHINA EAST ED |
QBE Insurance and CHINA EAST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and CHINA EAST
The main advantage of trading using opposite QBE Insurance and CHINA EAST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, CHINA EAST 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 CHINA EAST will offset losses from the drop in CHINA EAST's long position.| QBE Insurance vs. SERI INDUSTRIAL EO | QBE Insurance vs. GAMING FAC SA | QBE Insurance vs. BRAGG GAMING GRP | QBE Insurance vs. CONTAGIOUS GAMING INC |
| CHINA EAST vs. IDP EDUCATION LTD | CHINA EAST vs. Strategic Education | CHINA EAST vs. Laureate Education | CHINA EAST vs. Superior Plus Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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