Correlation Between Qingdao Port and Orient Overseas

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

Diversification Opportunities for Qingdao Port and Orient Overseas

-0.17

Correlation Coefficient

Qingdao Port  Orient Overseas

Good diversification

The 3 months correlation between Qingdao and Orient is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Port International and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas 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 Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas has no effect on the direction of Qingdao Port i.e., Qingdao Port and Orient Overseas go up and down completely randomly.

Pair Corralation between Qingdao Port and Orient Overseas

Assuming the 90 days horizon Qingdao Port International is expected to generate 1.55 times more return on investment than Orient Overseas. However, Qingdao Port is 1.55 times more volatile than Orient Overseas Limited. It trades about 0.15 of its potential returns per unit of risk. Orient Overseas Limited is currently generating about 0.02 per unit of risk. If you would invest  52.00  in Qingdao Port International on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Qingdao Port International or generate 38.46% return on investment over 90 days.

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

Qingdao Port International  vs.  Orient Overseas Limited

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.

Orient Overseas

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Overseas Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Orient Overseas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Qingdao Port and Orient Overseas

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

The idea behind Qingdao Port International and Orient Overseas Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.