Correlation Between QVC and China Construction

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

By analyzing existing cross correlation between QVC Group and China Construction Bank, you can compare the effects of market volatilities on QVC and China Construction 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 QVC with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of QVC and China Construction.

Diversification Opportunities for QVC and China Construction

-0.33

Correlation Coefficient

QVC  China Construction

Very good diversification

The 3 months correlation between QVC and China is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding QVC Group and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and QVC 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 QVC Group are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of QVC i.e., QVC and China Construction go up and down completely randomly.

Pair Corralation between QVC and China Construction

Assuming the 90 days horizon QVC Group is expected to generate 2.77 times more return on investment than China Construction. However, QVC is 2.77 times more volatile than China Construction Bank. It trades about 0.31 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.0 per unit of risk. If you would invest  283.00  in QVC Group on July 5, 2025 and sell it today you would earn a total of  1,166  from holding QVC Group or generate 412.01% return on investment over 90 days.

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

QVC Group  vs.  China Construction Bank

QVC Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in QVC Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile technical and fundamental indicators, QVC sustained solid returns over the last few months and may actually be approaching a breakup point.

China Construction Bank

Risk-Adjusted Performance

Weakest

Over the last 90 days China Construction Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, China Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with QVC and China Construction

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

The idea behind QVC Group and China Construction Bank 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.