Correlation Between Changjiang Publishing and Qtone Education

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

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

Diversification Opportunities for Changjiang Publishing and Qtone Education

0.16

Correlation Coefficient

Changjiang Publishing  Qtone Education

Average diversification

The 3 months correlation between Changjiang and Qtone is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Publishing Media 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 Changjiang Publishing 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 Changjiang Publishing Media 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 Changjiang Publishing i.e., Changjiang Publishing and Qtone Education go up and down completely randomly.

Pair Corralation between Changjiang Publishing and Qtone Education

Assuming the 90 days trading horizon Changjiang Publishing is expected to generate 3.48 times less return on investment than Qtone Education. But when comparing it to its historical volatility, Changjiang Publishing Media is 2.01 times less risky than Qtone Education. It trades about 0.08 of its potential returns per unit of risk. Qtone Education Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  596.00  in Qtone Education Group on September 2, 2024 and sell it today you would earn a total of  58.00  from holding Qtone Education Group or generate 9.73% return on investment over 90 days.

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

Changjiang Publishing Media  vs.  Qtone Education Group

Changjiang Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changjiang Publishing Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Changjiang Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qtone Education Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qtone Education Group are ranked lower than 11 (%) 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 Changjiang Publishing and Qtone Education

The main advantage of trading using opposite Changjiang Publishing and Qtone Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changjiang Publishing 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 Changjiang Publishing Media 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.