Correlation Between Integrated Electronic and Beijing Compass

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

By analyzing existing cross correlation between Integrated Electronic Systems and Beijing Compass Technology, you can compare the effects of market volatilities on Integrated Electronic and Beijing Compass 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 Integrated Electronic with a short position of Beijing Compass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Electronic and Beijing Compass.

Diversification Opportunities for Integrated Electronic and Beijing Compass

0.26

Correlation Coefficient

Integrated Electronic  Beijing Compass

Modest diversification

The 3 months correlation between Integrated and Beijing is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Electronic Systems and Beijing Compass Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Compass Tech and Integrated Electronic 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 Integrated Electronic Systems are associated (or correlated) with Beijing Compass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Compass Tech has no effect on the direction of Integrated Electronic i.e., Integrated Electronic and Beijing Compass go up and down completely randomly.

Pair Corralation between Integrated Electronic and Beijing Compass

Assuming the 90 days trading horizon Integrated Electronic Systems is expected to generate 1.43 times more return on investment than Beijing Compass. However, Integrated Electronic is 1.43 times more volatile than Beijing Compass Technology. It trades about -0.08 of its potential returns per unit of risk. Beijing Compass Technology is currently generating about -0.2 per unit of risk. If you would invest  760.00  in Integrated Electronic Systems on October 10, 2024 and sell it today you would lose (87.00) from holding Integrated Electronic Systems or give up 11.45% of portfolio value over 90 days.

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

Integrated Electronic Systems  vs.  Beijing Compass Technology

Integrated Electronic

Risk-Adjusted Performance

2 of 100

Weak

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

Beijing Compass Tech

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Integrated Electronic and Beijing Compass

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

The idea behind Integrated Electronic Systems and Beijing Compass Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.