Correlation Between Guangdong Jingyi and Beijing Kingsoft

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

By analyzing existing cross correlation between Guangdong Jingyi Metal and Beijing Kingsoft Office, you can compare the effects of market volatilities on Guangdong Jingyi and Beijing Kingsoft 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 Guangdong Jingyi with a short position of Beijing Kingsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and Beijing Kingsoft.

Diversification Opportunities for Guangdong Jingyi and Beijing Kingsoft

0.74

Correlation Coefficient

Guangdong Jingyi  Beijing Kingsoft

Poor diversification

The 3 months correlation between Guangdong and Beijing is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Beijing Kingsoft Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Kingsoft Office and Guangdong Jingyi 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 Guangdong Jingyi Metal are associated (or correlated) with Beijing Kingsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Kingsoft Office has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Beijing Kingsoft go up and down completely randomly.

Pair Corralation between Guangdong Jingyi and Beijing Kingsoft

Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to under-perform the Beijing Kingsoft. In addition to that, Guangdong Jingyi is 1.04 times more volatile than Beijing Kingsoft Office. It trades about -0.18 of its total potential returns per unit of risk. Beijing Kingsoft Office is currently generating about -0.13 per unit of volatility. If you would invest  30,310  in Beijing Kingsoft Office on October 21, 2024 and sell it today you would lose (2,695) from holding Beijing Kingsoft Office or give up 8.89% of portfolio value over 90 days.

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

Guangdong Jingyi Metal  vs.  Beijing Kingsoft Office

Guangdong Jingyi Metal

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing Kingsoft Office

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Kingsoft Office are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Beijing Kingsoft is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guangdong Jingyi and Beijing Kingsoft

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

The idea behind Guangdong Jingyi Metal and Beijing Kingsoft Office 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.