Correlation Between Beijing Kingsoft and Jiangsu Apon

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

By analyzing existing cross correlation between Beijing Kingsoft Office and Jiangsu Apon Medical, you can compare the effects of market volatilities on Beijing Kingsoft and Jiangsu Apon 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 Kingsoft with a short position of Jiangsu Apon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Kingsoft and Jiangsu Apon.

Diversification Opportunities for Beijing Kingsoft and Jiangsu Apon

0.62

Correlation Coefficient

Beijing Kingsoft  Jiangsu Apon

Poor diversification

The 3 months correlation between Beijing and Jiangsu is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Kingsoft Office and Jiangsu Apon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Apon Medical and Beijing Kingsoft 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 Kingsoft Office are associated (or correlated) with Jiangsu Apon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Apon Medical has no effect on the direction of Beijing Kingsoft i.e., Beijing Kingsoft and Jiangsu Apon go up and down completely randomly.

Pair Corralation between Beijing Kingsoft and Jiangsu Apon

Assuming the 90 days trading horizon Beijing Kingsoft Office is expected to under-perform the Jiangsu Apon. But the stock apears to be less risky and, when comparing its historical volatility, Beijing Kingsoft Office is 2.56 times less risky than Jiangsu Apon. The stock trades about -0.31 of its potential returns per unit of risk. The Jiangsu Apon Medical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,670  in Jiangsu Apon Medical on October 8, 2024 and sell it today you would earn a total of  18.00  from holding Jiangsu Apon Medical or generate 1.08% return on investment over 90 days.

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

Beijing Kingsoft Office  vs.  Jiangsu Apon Medical

Beijing Kingsoft Office

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijing Kingsoft Office has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jiangsu Apon Medical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Apon Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Apon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijing Kingsoft and Jiangsu Apon

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

The idea behind Beijing Kingsoft Office and Jiangsu Apon Medical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.