Correlation Between Sichuan Fulin and Beijing Roborock

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

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

Diversification Opportunities for Sichuan Fulin and Beijing Roborock

-0.41

Correlation Coefficient

Sichuan Fulin  Beijing Roborock

Very good diversification

The 3 months correlation between Sichuan and Beijing is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Fulin Transportation and Beijing Roborock Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Roborock Tec and Sichuan Fulin 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 Sichuan Fulin Transportation are associated (or correlated) with Beijing Roborock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Roborock Tec has no effect on the direction of Sichuan Fulin i.e., Sichuan Fulin and Beijing Roborock go up and down completely randomly.

Pair Corralation between Sichuan Fulin and Beijing Roborock

Assuming the 90 days trading horizon Sichuan Fulin Transportation is expected to generate 0.58 times more return on investment than Beijing Roborock. However, Sichuan Fulin Transportation is 1.73 times less risky than Beijing Roborock. It trades about 0.26 of its potential returns per unit of risk. Beijing Roborock Technology is currently generating about 0.0 per unit of risk. If you would invest  508.00  in Sichuan Fulin Transportation on September 23, 2024 and sell it today you would earn a total of  275.00  from holding Sichuan Fulin Transportation or generate 54.13% return on investment over 90 days.

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

Sichuan Fulin Transportation  vs.  Beijing Roborock Technology

Sichuan Fulin Transp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Fulin Transportation are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Fulin sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing Roborock Tec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sichuan Fulin and Beijing Roborock

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

The idea behind Sichuan Fulin Transportation and Beijing Roborock 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.