Correlation Between Yingde Greatchem and Qtone Education

Can any of the company-specific risk be diversified away by investing in both Yingde Greatchem and Qtone Education 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 Yingde Greatchem and Qtone Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yingde Greatchem Chemicals and Qtone Education Group, you can compare the effects of market volatilities on Yingde Greatchem and Qtone Education 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 Yingde Greatchem with a short position of Qtone Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yingde Greatchem and Qtone Education.

Diversification Opportunities for Yingde Greatchem and Qtone Education

0.98

Correlation Coefficient

Yingde Greatchem  Qtone Education

Almost no diversification

The 3 months correlation between Yingde and Qtone is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Yingde Greatchem Chemicals and Qtone Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qtone Education Group and Yingde Greatchem 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 Yingde Greatchem Chemicals are associated (or correlated) with Qtone Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qtone Education Group has no effect on the direction of Yingde Greatchem i.e., Yingde Greatchem and Qtone Education go up and down completely randomly.

Pair Corralation between Yingde Greatchem and Qtone Education

Assuming the 90 days trading horizon Yingde Greatchem is expected to generate 1.86 times less return on investment than Qtone Education. But when comparing it to its historical volatility, Yingde Greatchem Chemicals is 1.58 times less risky than Qtone Education. It trades about 0.17 of its potential returns per unit of risk. Qtone Education Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  413.00  in Qtone Education Group on September 17, 2024 and sell it today you would earn a total of  273.00  from holding Qtone Education Group or generate 66.1% return on investment over 90 days.

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

Yingde Greatchem Chemicals  vs.  Qtone Education Group

Yingde Greatchem Che

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yingde Greatchem Chemicals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yingde Greatchem sustained solid returns over the last few months and may actually be approaching a breakup point.

Qtone Education Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qtone Education Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qtone Education sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yingde Greatchem and Qtone Education

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

The idea behind Yingde Greatchem Chemicals and Qtone Education Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.