Correlation Between Beijing Sanyuan and Vatti Corp

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

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

Diversification Opportunities for Beijing Sanyuan and Vatti Corp

0.36

Correlation Coefficient

Beijing Sanyuan  Vatti Corp

Weak diversification

The 3 months correlation between Beijing and Vatti is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Sanyuan Foods and Vatti Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vatti Corp and Beijing Sanyuan 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 Sanyuan Foods are associated (or correlated) with Vatti Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vatti Corp has no effect on the direction of Beijing Sanyuan i.e., Beijing Sanyuan and Vatti Corp go up and down completely randomly.

Pair Corralation between Beijing Sanyuan and Vatti Corp

Assuming the 90 days trading horizon Beijing Sanyuan is expected to generate 3.48 times less return on investment than Vatti Corp. In addition to that, Beijing Sanyuan is 1.1 times more volatile than Vatti Corp. It trades about 0.0 of its total potential returns per unit of risk. Vatti Corp is currently generating about 0.01 per unit of volatility. If you would invest  724.00  in Vatti Corp on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Vatti Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Beijing Sanyuan Foods  vs.  Vatti Corp

Beijing Sanyuan Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vatti Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Beijing Sanyuan and Vatti Corp

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

The idea behind Beijing Sanyuan Foods and Vatti Corp 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.