Correlation Between Beijing Baolande and Metallurgicalof China

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

By analyzing existing cross correlation between Beijing Baolande Software and Metallurgical of, you can compare the effects of market volatilities on Beijing Baolande and Metallurgicalof China 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 Baolande with a short position of Metallurgicalof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Baolande and Metallurgicalof China.

Diversification Opportunities for Beijing Baolande and Metallurgicalof China

-0.03

Correlation Coefficient

Beijing Baolande  Metallurgicalof China

Good diversification

The 3 months correlation between Beijing and Metallurgicalof is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Baolande Software and Metallurgical of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallurgicalof China and Beijing Baolande 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 Baolande Software are associated (or correlated) with Metallurgicalof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallurgicalof China has no effect on the direction of Beijing Baolande i.e., Beijing Baolande and Metallurgicalof China go up and down completely randomly.

Pair Corralation between Beijing Baolande and Metallurgicalof China

Assuming the 90 days trading horizon Beijing Baolande Software is expected to generate 4.81 times more return on investment than Metallurgicalof China. However, Beijing Baolande is 4.81 times more volatile than Metallurgical of. It trades about 0.03 of its potential returns per unit of risk. Metallurgical of is currently generating about -0.13 per unit of risk. If you would invest  2,870  in Beijing Baolande Software on December 29, 2024 and sell it today you would earn a total of  65.00  from holding Beijing Baolande Software or generate 2.26% return on investment over 90 days.

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

Beijing Baolande Software  vs.  Metallurgical of

Beijing Baolande Software

Risk-Adjusted Performance

Weak

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

Metallurgicalof China

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metallurgical of 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 Beijing Baolande and Metallurgicalof China

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

The idea behind Beijing Baolande Software and Metallurgical of 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.