Correlation Between Beijing Compass and V V

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

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

Diversification Opportunities for Beijing Compass and V V

0.52

Correlation Coefficient

Beijing Compass  V V

Very weak diversification

The 3 months correlation between Beijing and 600300 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Compass Technology and V V Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V V Food and Beijing Compass 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 Compass Technology are associated (or correlated) with V V. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V V Food has no effect on the direction of Beijing Compass i.e., Beijing Compass and V V go up and down completely randomly.

Pair Corralation between Beijing Compass and V V

Assuming the 90 days trading horizon Beijing Compass Technology is expected to under-perform the V V. But the stock apears to be less risky and, when comparing its historical volatility, Beijing Compass Technology is 1.17 times less risky than V V. The stock trades about -0.25 of its potential returns per unit of risk. The V V Food is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  316.00  in V V Food on October 6, 2024 and sell it today you would lose (9.00) from holding V V Food or give up 2.85% of portfolio value over 90 days.

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

Beijing Compass Technology  vs.  V V Food

Beijing Compass Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Compass Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Compass may actually be approaching a critical reversion point that can send shares even higher in February 2025.

V V Food

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in V V Food are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, V V may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Beijing Compass and V V

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

The idea behind Beijing Compass Technology and V V Food 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.