Correlation Between Bangyan Technology and Beijing Shanghai

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

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

Diversification Opportunities for Bangyan Technology and Beijing Shanghai

0.6

Correlation Coefficient

Bangyan Technology  Beijing Shanghai

Poor diversification

The 3 months correlation between Bangyan and Beijing is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bangyan Technology Co and Beijing Shanghai High Speed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Shanghai High and Bangyan Technology 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 Bangyan Technology Co are associated (or correlated) with Beijing Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Shanghai High has no effect on the direction of Bangyan Technology i.e., Bangyan Technology and Beijing Shanghai go up and down completely randomly.

Pair Corralation between Bangyan Technology and Beijing Shanghai

Assuming the 90 days trading horizon Bangyan Technology Co is expected to under-perform the Beijing Shanghai. In addition to that, Bangyan Technology is 2.23 times more volatile than Beijing Shanghai High Speed. It trades about -0.02 of its total potential returns per unit of risk. Beijing Shanghai High Speed is currently generating about 0.04 per unit of volatility. If you would invest  490.00  in Beijing Shanghai High Speed on October 10, 2024 and sell it today you would earn a total of  98.00  from holding Beijing Shanghai High Speed or generate 20.0% return on investment over 90 days.

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

Bangyan Technology Co  vs.  Beijing Shanghai High Speed

Bangyan Technology

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bangyan Technology Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bangyan Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Beijing Shanghai High

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with Bangyan Technology and Beijing Shanghai

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

The idea behind Bangyan Technology Co and Beijing Shanghai High Speed 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.