Correlation Between Qiming Information and Shanghai Pudong

Can any of the company-specific risk be diversified away by investing in both Qiming Information and Shanghai Pudong 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 Qiming Information and Shanghai Pudong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qiming Information Technology and Shanghai Pudong Development, you can compare the effects of market volatilities on Qiming Information and Shanghai Pudong 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 Qiming Information with a short position of Shanghai Pudong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qiming Information and Shanghai Pudong.

Diversification Opportunities for Qiming Information and Shanghai Pudong

0.1

Correlation Coefficient

Qiming Information  Shanghai Pudong

Average diversification

The 3 months correlation between Qiming and Shanghai is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Qiming Information Technology and Shanghai Pudong Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Pudong Deve and Qiming Information 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 Qiming Information Technology are associated (or correlated) with Shanghai Pudong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Pudong Deve has no effect on the direction of Qiming Information i.e., Qiming Information and Shanghai Pudong go up and down completely randomly.

Pair Corralation between Qiming Information and Shanghai Pudong

Assuming the 90 days trading horizon Qiming Information is expected to generate 4.32 times less return on investment than Shanghai Pudong. In addition to that, Qiming Information is 2.87 times more volatile than Shanghai Pudong Development. It trades about 0.0 of its total potential returns per unit of risk. Shanghai Pudong Development is currently generating about 0.03 per unit of volatility. If you would invest  1,013  in Shanghai Pudong Development on September 28, 2024 and sell it today you would earn a total of  21.00  from holding Shanghai Pudong Development or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Qiming Information Technology  vs.  Shanghai Pudong Development

Qiming Information

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Qiming Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Qiming Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shanghai Pudong Deve

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Pudong Development are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shanghai Pudong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qiming Information and Shanghai Pudong

The main advantage of trading using opposite Qiming Information and Shanghai Pudong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qiming Information position performs unexpectedly, Shanghai Pudong 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 Shanghai Pudong will offset losses from the drop in Shanghai Pudong's long position.

The idea behind Qiming Information Technology and Shanghai Pudong Development 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.