Correlation Between Beijing Kaiwen and APT Medical

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

Diversification Opportunities for Beijing Kaiwen and APT Medical

0.26

Correlation Coefficient

Beijing Kaiwen  APT Medical

Modest diversification

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

Pair Corralation between Beijing Kaiwen and APT Medical

Assuming the 90 days trading horizon Beijing Kaiwen Education is expected to under-perform the APT Medical. In addition to that, Beijing Kaiwen is 2.21 times more volatile than APT Medical. It trades about -0.03 of its total potential returns per unit of risk. APT Medical is currently generating about 0.05 per unit of volatility. If you would invest  35,200  in APT Medical on September 25, 2024 and sell it today you would earn a total of  562.00  from holding APT Medical or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Beijing Kaiwen Education  vs.  APT Medical

Beijing Kaiwen Education

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Kaiwen Education are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Kaiwen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

APT Medical

Risk-Adjusted Performance

5 of 100

Insignificant

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

Pair Trading with Beijing Kaiwen and APT Medical

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

The idea behind Beijing Kaiwen Education and APT Medical 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.