Correlation Between Qingling Motors and AB Volvo

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Can any of the company-specific risk be diversified away by investing in both Qingling Motors and AB Volvo 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 AB Volvo 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 AB Volvo, you can compare the effects of market volatilities on Qingling Motors and AB Volvo 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 AB Volvo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingling Motors and AB Volvo.

Diversification Opportunities for Qingling Motors and AB Volvo

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Qingling and VOL3 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Qingling Motors Co and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo 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 AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Qingling Motors i.e., Qingling Motors and AB Volvo go up and down completely randomly.

Pair Corralation between Qingling Motors and AB Volvo

Assuming the 90 days horizon Qingling Motors Co is expected to under-perform the AB Volvo. In addition to that, Qingling Motors is 1.13 times more volatile than AB Volvo. It trades about -0.07 of its total potential returns per unit of risk. AB Volvo is currently generating about 0.28 per unit of volatility. If you would invest  2,334  in AB Volvo on October 22, 2024 and sell it today you would earn a total of  168.00  from holding AB Volvo or generate 7.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy94.12%
ValuesDaily Returns

Qingling Motors Co  vs.  AB Volvo

 Performance 
       Timeline  
Qingling Motors 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Qingling Motors Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Qingling Motors is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
AB Volvo 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in AB Volvo are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, AB Volvo is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Qingling Motors and AB Volvo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Qingling Motors and AB Volvo

The main advantage of trading using opposite Qingling Motors and AB Volvo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qingling Motors position performs unexpectedly, AB Volvo 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 AB Volvo will offset losses from the drop in AB Volvo's long position.
The idea behind Qingling Motors Co and AB Volvo 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.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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