Correlation Between Beijing Kaiwen and EmbedWay TechCorp

Can any of the company-specific risk be diversified away by investing in both Beijing Kaiwen and EmbedWay TechCorp 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 EmbedWay TechCorp 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 EmbedWay TechCorp, you can compare the effects of market volatilities on Beijing Kaiwen and EmbedWay TechCorp 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 EmbedWay TechCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Kaiwen and EmbedWay TechCorp.

Diversification Opportunities for Beijing Kaiwen and EmbedWay TechCorp

0.41

Correlation Coefficient

Beijing Kaiwen  EmbedWay TechCorp

Very weak diversification

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

Pair Corralation between Beijing Kaiwen and EmbedWay TechCorp

Assuming the 90 days trading horizon Beijing Kaiwen is expected to generate 13.57 times less return on investment than EmbedWay TechCorp. But when comparing it to its historical volatility, Beijing Kaiwen Education is 1.3 times less risky than EmbedWay TechCorp. It trades about 0.0 of its potential returns per unit of risk. EmbedWay TechCorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,293  in EmbedWay TechCorp on October 25, 2024 and sell it today you would earn a total of  911.00  from holding EmbedWay TechCorp or generate 70.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Beijing Kaiwen Education  vs.  EmbedWay TechCorp

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.

EmbedWay TechCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EmbedWay TechCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Beijing Kaiwen and EmbedWay TechCorp

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

The idea behind Beijing Kaiwen Education and EmbedWay TechCorp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.