Correlation Between Beijing Mainstreets and Zhejiang HISUN

Can any of the company-specific risk be diversified away by investing in both Beijing Mainstreets and Zhejiang HISUN 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 Zhejiang HISUN 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 Zhejiang HISUN Biomaterials, you can compare the effects of market volatilities on Beijing Mainstreets and Zhejiang HISUN 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 Zhejiang HISUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Mainstreets and Zhejiang HISUN.

Diversification Opportunities for Beijing Mainstreets and Zhejiang HISUN

0.69

Correlation Coefficient

Beijing Mainstreets  Zhejiang HISUN

Poor diversification

The 3 months correlation between Beijing and Zhejiang is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Mainstreets Investment and Zhejiang HISUN Biomaterials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang HISUN Bioma 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 Zhejiang HISUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang HISUN Bioma has no effect on the direction of Beijing Mainstreets i.e., Beijing Mainstreets and Zhejiang HISUN go up and down completely randomly.

Pair Corralation between Beijing Mainstreets and Zhejiang HISUN

Assuming the 90 days trading horizon Beijing Mainstreets is expected to generate 1.21 times less return on investment than Zhejiang HISUN. In addition to that, Beijing Mainstreets is 1.01 times more volatile than Zhejiang HISUN Biomaterials. It trades about 0.14 of its total potential returns per unit of risk. Zhejiang HISUN Biomaterials is currently generating about 0.17 per unit of volatility. If you would invest  801.00  in Zhejiang HISUN Biomaterials on September 13, 2024 and sell it today you would earn a total of  282.00  from holding Zhejiang HISUN Biomaterials or generate 35.21% return on investment over 90 days.

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

Beijing Mainstreets Investment  vs.  Zhejiang HISUN Biomaterials

Beijing Mainstreets

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Mainstreets Investment are ranked lower than 11 (%) 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.

Zhejiang HISUN Bioma

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang HISUN Biomaterials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang HISUN sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijing Mainstreets and Zhejiang HISUN

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

The idea behind Beijing Mainstreets Investment and Zhejiang HISUN Biomaterials 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..