Correlation Between Beijing Roborock and Beijing Yanjing

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

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

Diversification Opportunities for Beijing Roborock and Beijing Yanjing

0.08

Correlation Coefficient

Beijing Roborock  Beijing Yanjing

Significant diversification

The 3 months correlation between Beijing and Beijing is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Roborock Technology and Beijing Yanjing Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Yanjing Brewery and Beijing Roborock 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 Roborock Technology are associated (or correlated) with Beijing Yanjing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Yanjing Brewery has no effect on the direction of Beijing Roborock i.e., Beijing Roborock and Beijing Yanjing go up and down completely randomly.

Pair Corralation between Beijing Roborock and Beijing Yanjing

Assuming the 90 days trading horizon Beijing Roborock Technology is expected to generate 1.78 times more return on investment than Beijing Yanjing. However, Beijing Roborock is 1.78 times more volatile than Beijing Yanjing Brewery. It trades about 0.01 of its potential returns per unit of risk. Beijing Yanjing Brewery is currently generating about 0.0 per unit of risk. If you would invest  24,166  in Beijing Roborock Technology on September 29, 2024 and sell it today you would lose (3,064) from holding Beijing Roborock Technology or give up 12.68% of portfolio value over 90 days.

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

Beijing Roborock Technology  vs.  Beijing Yanjing Brewery

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Beijing Yanjing Brewery

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Yanjing Brewery are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Beijing Yanjing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Beijing Roborock and Beijing Yanjing

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

The idea behind Beijing Roborock Technology and Beijing Yanjing Brewery 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.