Correlation Between Qingdao Citymedia and Inner Mongolia

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

By analyzing existing cross correlation between Qingdao Citymedia Co and Inner Mongolia Furui, you can compare the effects of market volatilities on Qingdao Citymedia and Inner Mongolia 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 Citymedia with a short position of Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Citymedia and Inner Mongolia.

Diversification Opportunities for Qingdao Citymedia and Inner Mongolia

0.22

Correlation Coefficient

Qingdao Citymedia  Inner Mongolia

Modest diversification

The 3 months correlation between Qingdao and Inner is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Citymedia Co and Inner Mongolia Furui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia Furui and Qingdao Citymedia 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 Citymedia Co are associated (or correlated) with Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia Furui has no effect on the direction of Qingdao Citymedia i.e., Qingdao Citymedia and Inner Mongolia go up and down completely randomly.

Pair Corralation between Qingdao Citymedia and Inner Mongolia

Assuming the 90 days trading horizon Qingdao Citymedia Co is expected to generate 0.53 times more return on investment than Inner Mongolia. However, Qingdao Citymedia Co is 1.9 times less risky than Inner Mongolia. It trades about 0.2 of its potential returns per unit of risk. Inner Mongolia Furui is currently generating about 0.05 per unit of risk. If you would invest  635.00  in Qingdao Citymedia Co on September 13, 2024 and sell it today you would earn a total of  197.00  from holding Qingdao Citymedia Co or generate 31.02% return on investment over 90 days.

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

Qingdao Citymedia Co  vs.  Inner Mongolia Furui

Qingdao Citymedia

Risk-Adjusted Performance

15 of 100

Good

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

Inner Mongolia Furui

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inner Mongolia Furui are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inner Mongolia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qingdao Citymedia and Inner Mongolia

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

The idea behind Qingdao Citymedia Co and Inner Mongolia Furui 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.