Correlation Between ChengDu Hi and Beken Corp

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

By analyzing existing cross correlation between ChengDu Hi Tech Development and Beken Corp, you can compare the effects of market volatilities on ChengDu Hi and Beken Corp 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 ChengDu Hi with a short position of Beken Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChengDu Hi and Beken Corp.

Diversification Opportunities for ChengDu Hi and Beken Corp

0.0

Correlation Coefficient

ChengDu Hi  Beken Corp

Pay attention - limited upside

The 3 months correlation between ChengDu and Beken is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ChengDu Hi Tech Development and Beken Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beken Corp and ChengDu Hi 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 ChengDu Hi Tech Development are associated (or correlated) with Beken Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beken Corp has no effect on the direction of ChengDu Hi i.e., ChengDu Hi and Beken Corp go up and down completely randomly.

Pair Corralation between ChengDu Hi and Beken Corp

If you would invest  1,288  in ChengDu Hi Tech Development on October 11, 2024 and sell it today you would earn a total of  3,781  from holding ChengDu Hi Tech Development or generate 293.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.21%
Values	Daily Returns

ChengDu Hi Tech Development  vs.  Beken Corp

ChengDu Hi Tech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ChengDu Hi Tech Development are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ChengDu Hi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Beken Corp

Risk-Adjusted Performance

0 of 100

OK

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

Pair Trading with ChengDu Hi and Beken Corp

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

The idea behind ChengDu Hi Tech Development and Beken Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.