Correlation Between Beijing Kaiwen and Beijing Seeyon

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

Diversification Opportunities for Beijing Kaiwen and Beijing Seeyon

0.62

Correlation Coefficient

Beijing Kaiwen  Beijing Seeyon

Poor diversification

The 3 months correlation between Beijing and Beijing is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Kaiwen Education and Beijing Seeyon Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Seeyon Internet 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 Beijing Seeyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Seeyon Internet has no effect on the direction of Beijing Kaiwen i.e., Beijing Kaiwen and Beijing Seeyon go up and down completely randomly.

Pair Corralation between Beijing Kaiwen and Beijing Seeyon

Assuming the 90 days trading horizon Beijing Kaiwen Education is expected to generate 0.81 times more return on investment than Beijing Seeyon. However, Beijing Kaiwen Education is 1.24 times less risky than Beijing Seeyon. It trades about 0.01 of its potential returns per unit of risk. Beijing Seeyon Internet is currently generating about -0.04 per unit of risk. If you would invest  467.00  in Beijing Kaiwen Education on October 5, 2024 and sell it today you would lose (14.00) from holding Beijing Kaiwen Education or give up 3.0% 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.  Beijing Seeyon Internet

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.

Beijing Seeyon Internet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Seeyon Internet 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.

Pair Trading with Beijing Kaiwen and Beijing Seeyon

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

The idea behind Beijing Kaiwen Education and Beijing Seeyon Internet 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.