Correlation Between Duzhe Publishing and Beijing Kaiwen

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

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

Diversification Opportunities for Duzhe Publishing and Beijing Kaiwen

0.7

Correlation Coefficient

Duzhe Publishing  Beijing Kaiwen

Poor diversification

The 3 months correlation between Duzhe and Beijing is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Duzhe Publishing Media and Beijing Kaiwen Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Kaiwen Education and Duzhe Publishing 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 Duzhe Publishing Media are associated (or correlated) with Beijing Kaiwen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Kaiwen Education has no effect on the direction of Duzhe Publishing i.e., Duzhe Publishing and Beijing Kaiwen go up and down completely randomly.

Pair Corralation between Duzhe Publishing and Beijing Kaiwen

Assuming the 90 days trading horizon Duzhe Publishing Media is expected to generate 0.93 times more return on investment than Beijing Kaiwen. However, Duzhe Publishing Media is 1.08 times less risky than Beijing Kaiwen. It trades about -0.2 of its potential returns per unit of risk. Beijing Kaiwen Education is currently generating about -0.24 per unit of risk. If you would invest  690.00  in Duzhe Publishing Media on October 10, 2024 and sell it today you would lose (115.00) from holding Duzhe Publishing Media or give up 16.67% of portfolio value over 90 days.

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

Duzhe Publishing Media  vs.  Beijing Kaiwen Education

Duzhe Publishing Media

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Duzhe Publishing Media are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duzhe Publishing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Beijing Kaiwen Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Duzhe Publishing and Beijing Kaiwen

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

The idea behind Duzhe Publishing Media and Beijing Kaiwen Education 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.