Correlation Between Beijing Sanyuan and Taiji Computer

Can any of the company-specific risk be diversified away by investing in both Beijing Sanyuan and Taiji Computer 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 Taiji Computer 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 Taiji Computer Corp, you can compare the effects of market volatilities on Beijing Sanyuan and Taiji Computer 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 Taiji Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Sanyuan and Taiji Computer.

Diversification Opportunities for Beijing Sanyuan and Taiji Computer

0.25

Correlation Coefficient

Beijing Sanyuan  Taiji Computer

Modest diversification

The 3 months correlation between Beijing and Taiji is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Sanyuan Foods and Taiji Computer Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiji Computer 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 Taiji Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiji Computer Corp has no effect on the direction of Beijing Sanyuan i.e., Beijing Sanyuan and Taiji Computer go up and down completely randomly.

Pair Corralation between Beijing Sanyuan and Taiji Computer

Assuming the 90 days trading horizon Beijing Sanyuan Foods is expected to generate 1.67 times more return on investment than Taiji Computer. However, Beijing Sanyuan is 1.67 times more volatile than Taiji Computer Corp. It trades about -0.14 of its potential returns per unit of risk. Taiji Computer Corp is currently generating about -0.42 per unit of risk. If you would invest  465.00  in Beijing Sanyuan Foods on October 9, 2024 and sell it today you would lose (55.00) from holding Beijing Sanyuan Foods or give up 11.83% of portfolio value over 90 days.

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

Beijing Sanyuan Foods  vs.  Taiji Computer 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.

Taiji Computer Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiji Computer Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Taiji Computer 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 Taiji Computer

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

The idea behind Beijing Sanyuan Foods and Taiji Computer 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.