Correlation Between Qingdao Port and COSCO SHIPPING

Can any of the company-specific risk be diversified away by investing in both Qingdao Port and COSCO SHIPPING 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 Qingdao Port and COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qingdao Port International and COSCO SHIPPING Holdings, you can compare the effects of market volatilities on Qingdao Port and COSCO SHIPPING 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 Qingdao Port with a short position of COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Port and COSCO SHIPPING.

Diversification Opportunities for Qingdao Port and COSCO SHIPPING

0.47

Correlation Coefficient

Qingdao Port  COSCO SHIPPING

Very weak diversification

The 3 months correlation between Qingdao and COSCO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Port International and COSCO SHIPPING Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Holdings and Qingdao Port 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 Qingdao Port International are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Holdings has no effect on the direction of Qingdao Port i.e., Qingdao Port and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Qingdao Port and COSCO SHIPPING

Assuming the 90 days horizon Qingdao Port is expected to generate 2.11 times less return on investment than COSCO SHIPPING. But when comparing it to its historical volatility, Qingdao Port International is 2.33 times less risky than COSCO SHIPPING. It trades about 0.15 of its potential returns per unit of risk. COSCO SHIPPING Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  80.00  in COSCO SHIPPING Holdings on September 23, 2024 and sell it today you would earn a total of  65.00  from holding COSCO SHIPPING Holdings or generate 81.25% return on investment over 90 days.

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

Qingdao Port International  vs.  COSCO SHIPPING Holdings

Qingdao Port Interna

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Port International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Qingdao Port reported solid returns over the last few months and may actually be approaching a breakup point.

COSCO SHIPPING Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSCO SHIPPING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qingdao Port and COSCO SHIPPING

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

The idea behind Qingdao Port International and COSCO SHIPPING Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.