Correlation Between Gem Year and Beijing Roborock

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

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

Diversification Opportunities for Gem Year and Beijing Roborock

-0.73

Correlation Coefficient

Gem Year  Beijing Roborock

Pay attention - limited upside

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

Pair Corralation between Gem Year and Beijing Roborock

Assuming the 90 days trading horizon Gem Year is expected to generate 2.32 times less return on investment than Beijing Roborock. But when comparing it to its historical volatility, Gem Year Industrial Co is 1.24 times less risky than Beijing Roborock. It trades about 0.09 of its potential returns per unit of risk. Beijing Roborock Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  21,540  in Beijing Roborock Technology on October 23, 2024 and sell it today you would earn a total of  1,960  from holding Beijing Roborock Technology or generate 9.1% return on investment over 90 days.

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

Gem Year Industrial Co  vs.  Beijing Roborock Technology

Gem Year Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem Year sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing Roborock Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Roborock Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Gem Year and Beijing Roborock

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

The idea behind Gem Year Industrial Co and Beijing Roborock Technology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.