Correlation Between Kidswant Children and Beijing Enlight

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

By analyzing existing cross correlation between Kidswant Children Products and Beijing Enlight Media, you can compare the effects of market volatilities on Kidswant Children and Beijing Enlight 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 Kidswant Children with a short position of Beijing Enlight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kidswant Children and Beijing Enlight.

Diversification Opportunities for Kidswant Children and Beijing Enlight

0.73

Correlation Coefficient

Kidswant Children  Beijing Enlight

Poor diversification

The 3 months correlation between Kidswant and Beijing is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kidswant Children Products and Beijing Enlight Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Enlight Media and Kidswant Children 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 Kidswant Children Products are associated (or correlated) with Beijing Enlight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Enlight Media has no effect on the direction of Kidswant Children i.e., Kidswant Children and Beijing Enlight go up and down completely randomly.

Pair Corralation between Kidswant Children and Beijing Enlight

Assuming the 90 days trading horizon Kidswant Children is expected to generate 3.12 times less return on investment than Beijing Enlight. But when comparing it to its historical volatility, Kidswant Children Products is 1.66 times less risky than Beijing Enlight. It trades about 0.12 of its potential returns per unit of risk. Beijing Enlight Media is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  959.00  in Beijing Enlight Media on December 26, 2024 and sell it today you would earn a total of  1,176  from holding Beijing Enlight Media or generate 122.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Kidswant Children Products  vs.  Beijing Enlight Media

Kidswant Children

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kidswant Children Products are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kidswant Children sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing Enlight Media

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Enlight Media are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Enlight sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kidswant Children and Beijing Enlight

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

The idea behind Kidswant Children Products and Beijing Enlight Media 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.