Correlation Between Fujian Wanchen and Beijing Mainstreets

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Can any of the company-specific risk be diversified away by investing in both Fujian Wanchen and Beijing Mainstreets 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 Fujian Wanchen and Beijing Mainstreets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fujian Wanchen Biotechnology and Beijing Mainstreets Investment, you can compare the effects of market volatilities on Fujian Wanchen and Beijing Mainstreets 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 Fujian Wanchen with a short position of Beijing Mainstreets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Wanchen and Beijing Mainstreets.

Diversification Opportunities for Fujian Wanchen and Beijing Mainstreets

FujianBeijingDiversified AwayFujianBeijingDiversified Away100%
0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Fujian and Beijing is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Wanchen Biotechnology and Beijing Mainstreets Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Mainstreets and Fujian Wanchen 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 Fujian Wanchen Biotechnology are associated (or correlated) with Beijing Mainstreets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Mainstreets has no effect on the direction of Fujian Wanchen i.e., Fujian Wanchen and Beijing Mainstreets go up and down completely randomly.

Pair Corralation between Fujian Wanchen and Beijing Mainstreets

Assuming the 90 days trading horizon Fujian Wanchen Biotechnology is expected to generate 1.59 times more return on investment than Beijing Mainstreets. However, Fujian Wanchen is 1.59 times more volatile than Beijing Mainstreets Investment. It trades about 0.26 of its potential returns per unit of risk. Beijing Mainstreets Investment is currently generating about 0.1 per unit of risk. If you would invest  2,957  in Fujian Wanchen Biotechnology on November 20, 2024 and sell it today you would earn a total of  6,713  from holding Fujian Wanchen Biotechnology or generate 227.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fujian Wanchen Biotechnology  vs.  Beijing Mainstreets Investment

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10010203040
JavaScript chart by amCharts 3.21.15300972 000609
       Timeline  
Fujian Wanchen Biote 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Wanchen Biotechnology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Wanchen sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb708090100
Beijing Mainstreets 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Beijing Mainstreets Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Beijing Mainstreets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.12.22.32.42.52.62.72.8

Fujian Wanchen and Beijing Mainstreets Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.82-8.86-5.89-2.920.03.16.249.3912.54 0.0150.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15300972 000609
       Returns  

Pair Trading with Fujian Wanchen and Beijing Mainstreets

The main advantage of trading using opposite Fujian Wanchen and Beijing Mainstreets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Wanchen position performs unexpectedly, Beijing Mainstreets 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 Mainstreets will offset losses from the drop in Beijing Mainstreets' long position.
The idea behind Fujian Wanchen Biotechnology and Beijing Mainstreets Investment 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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