Correlation Between Beijing Mainstreets and Xinyaqiang Silicon

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

By analyzing existing cross correlation between Beijing Mainstreets Investment and Xinyaqiang Silicon Chemistry, you can compare the effects of market volatilities on Beijing Mainstreets and Xinyaqiang Silicon 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 Beijing Mainstreets with a short position of Xinyaqiang Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Mainstreets and Xinyaqiang Silicon.

Diversification Opportunities for Beijing Mainstreets and Xinyaqiang Silicon

-0.08

Correlation Coefficient

Beijing Mainstreets  Xinyaqiang Silicon

Good diversification

The 3 months correlation between Beijing and Xinyaqiang is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Mainstreets Investment and Xinyaqiang Silicon Chemistry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyaqiang Silicon and Beijing Mainstreets 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 Beijing Mainstreets Investment are associated (or correlated) with Xinyaqiang Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyaqiang Silicon has no effect on the direction of Beijing Mainstreets i.e., Beijing Mainstreets and Xinyaqiang Silicon go up and down completely randomly.

Pair Corralation between Beijing Mainstreets and Xinyaqiang Silicon

Assuming the 90 days trading horizon Beijing Mainstreets Investment is expected to generate 0.77 times more return on investment than Xinyaqiang Silicon. However, Beijing Mainstreets Investment is 1.3 times less risky than Xinyaqiang Silicon. It trades about 0.39 of its potential returns per unit of risk. Xinyaqiang Silicon Chemistry is currently generating about -0.06 per unit of risk. If you would invest  217.00  in Beijing Mainstreets Investment on October 25, 2024 and sell it today you would earn a total of  57.00  from holding Beijing Mainstreets Investment or generate 26.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Beijing Mainstreets Investment  vs.  Xinyaqiang Silicon Chemistry

Beijing Mainstreets

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Mainstreets Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Mainstreets sustained solid returns over the last few months and may actually be approaching a breakup point.

Xinyaqiang Silicon

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xinyaqiang Silicon Chemistry are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinyaqiang Silicon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijing Mainstreets and Xinyaqiang Silicon

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

The idea behind Beijing Mainstreets Investment and Xinyaqiang Silicon Chemistry 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.