Correlation Between Qingling Motors and PACCAR
Can any of the company-specific risk be diversified away by investing in both Qingling Motors and PACCAR 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 Qingling Motors and PACCAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qingling Motors Co and PACCAR Inc, you can compare the effects of market volatilities on Qingling Motors and PACCAR 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 Qingling Motors with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingling Motors and PACCAR.
Diversification Opportunities for Qingling Motors and PACCAR
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Qingling and PACCAR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Qingling Motors Co and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Qingling Motors 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 Qingling Motors Co are associated (or correlated) with PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of Qingling Motors i.e., Qingling Motors and PACCAR go up and down completely randomly.
Pair Corralation between Qingling Motors and PACCAR
Assuming the 90 days horizon Qingling Motors Co is expected to generate 1.92 times more return on investment than PACCAR. However, Qingling Motors is 1.92 times more volatile than PACCAR Inc. It trades about 0.17 of its potential returns per unit of risk. PACCAR Inc is currently generating about -0.21 per unit of risk. If you would invest 5.68 in Qingling Motors Co on September 28, 2024 and sell it today you would earn a total of 0.52 from holding Qingling Motors Co or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qingling Motors Co vs. PACCAR Inc
Performance |
| Timeline |
| Qingling Motors |
| PACCAR Inc |
Qingling Motors and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qingling Motors and PACCAR
The main advantage of trading using opposite Qingling Motors and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qingling Motors position performs unexpectedly, PACCAR 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 PACCAR will offset losses from the drop in PACCAR's long position.| Qingling Motors vs. PACCAR Inc | Qingling Motors vs. Sinotruk Limited | Qingling Motors vs. Hyster Yale Materials Handling |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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