Correlation Between Cultural Investment and Qilu Bank

Can any of the company-specific risk be diversified away by investing in both Cultural Investment and Qilu Bank 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 Cultural Investment and Qilu Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cultural Investment Holdings and Qilu Bank Co, you can compare the effects of market volatilities on Cultural Investment and Qilu Bank 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 Cultural Investment with a short position of Qilu Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cultural Investment and Qilu Bank.

Diversification Opportunities for Cultural Investment and Qilu Bank

0.45

Correlation Coefficient

Cultural Investment  Qilu Bank

Very weak diversification

The 3 months correlation between Cultural and Qilu is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and Qilu Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qilu Bank and Cultural Investment 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 Cultural Investment Holdings are associated (or correlated) with Qilu Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qilu Bank has no effect on the direction of Cultural Investment i.e., Cultural Investment and Qilu Bank go up and down completely randomly.

Pair Corralation between Cultural Investment and Qilu Bank

Assuming the 90 days trading horizon Cultural Investment Holdings is expected to generate 1.35 times more return on investment than Qilu Bank. However, Cultural Investment is 1.35 times more volatile than Qilu Bank Co. It trades about 0.15 of its potential returns per unit of risk. Qilu Bank Co is currently generating about 0.18 per unit of risk. If you would invest  193.00  in Cultural Investment Holdings on September 14, 2024 and sell it today you would earn a total of  52.00  from holding Cultural Investment Holdings or generate 26.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Cultural Investment Holdings  vs.  Qilu Bank Co

Cultural Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cultural Investment Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cultural Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Qilu Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qilu Bank Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qilu Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cultural Investment and Qilu Bank

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

The idea behind Cultural Investment Holdings and Qilu Bank Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.