Correlation Between Beijing Kaiwen and Iat Automobile

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

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

Diversification Opportunities for Beijing Kaiwen and Iat Automobile

0.68

Correlation Coefficient

Beijing Kaiwen  Iat Automobile

Poor diversification

The 3 months correlation between Beijing and Iat is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Kaiwen Education and Iat Automobile Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iat Automobile Technology and Beijing Kaiwen 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 Kaiwen Education are associated (or correlated) with Iat Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iat Automobile Technology has no effect on the direction of Beijing Kaiwen i.e., Beijing Kaiwen and Iat Automobile go up and down completely randomly.

Pair Corralation between Beijing Kaiwen and Iat Automobile

Assuming the 90 days trading horizon Beijing Kaiwen Education is expected to under-perform the Iat Automobile. In addition to that, Beijing Kaiwen is 1.43 times more volatile than Iat Automobile Technology. It trades about -0.16 of its total potential returns per unit of risk. Iat Automobile Technology is currently generating about -0.17 per unit of volatility. If you would invest  1,271  in Iat Automobile Technology on October 2, 2024 and sell it today you would lose (141.00) from holding Iat Automobile Technology or give up 11.09% of portfolio value over 90 days.

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

Beijing Kaiwen Education  vs.  Iat Automobile Technology

Beijing Kaiwen Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Kaiwen Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Iat Automobile Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Beijing Kaiwen and Iat Automobile

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

The idea behind Beijing Kaiwen Education and Iat Automobile 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.