Correlation Between Guangdong Tianhe and Beijing Yanjing

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

By analyzing existing cross correlation between Guangdong Tianhe Agricultural and Beijing Yanjing Brewery, you can compare the effects of market volatilities on Guangdong Tianhe and Beijing Yanjing 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 Guangdong Tianhe with a short position of Beijing Yanjing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Tianhe and Beijing Yanjing.

Diversification Opportunities for Guangdong Tianhe and Beijing Yanjing

-0.07

Correlation Coefficient

Guangdong Tianhe  Beijing Yanjing

Good diversification

The 3 months correlation between Guangdong and Beijing is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Tianhe Agricultural and Beijing Yanjing Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Yanjing Brewery and Guangdong Tianhe 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 Guangdong Tianhe Agricultural are associated (or correlated) with Beijing Yanjing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Yanjing Brewery has no effect on the direction of Guangdong Tianhe i.e., Guangdong Tianhe and Beijing Yanjing go up and down completely randomly.

Pair Corralation between Guangdong Tianhe and Beijing Yanjing

Assuming the 90 days trading horizon Guangdong Tianhe Agricultural is expected to under-perform the Beijing Yanjing. In addition to that, Guangdong Tianhe is 1.83 times more volatile than Beijing Yanjing Brewery. It trades about -0.03 of its total potential returns per unit of risk. Beijing Yanjing Brewery is currently generating about 0.05 per unit of volatility. If you would invest  1,113  in Beijing Yanjing Brewery on October 8, 2024 and sell it today you would earn a total of  62.00  from holding Beijing Yanjing Brewery or generate 5.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Guangdong Tianhe Agricultural  vs.  Beijing Yanjing Brewery

Guangdong Tianhe Agr

Risk-Adjusted Performance

0 of 100

Very Weak

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

Beijing Yanjing Brewery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Yanjing Brewery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Yanjing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guangdong Tianhe and Beijing Yanjing

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

The idea behind Guangdong Tianhe Agricultural and Beijing Yanjing Brewery 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.