Correlation Between Beijing Roborock and Sichuan Fulin

Can any of the company-specific risk be diversified away by investing in both Beijing Roborock and Sichuan Fulin 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 Sichuan Fulin 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 Sichuan Fulin Transportation, you can compare the effects of market volatilities on Beijing Roborock and Sichuan Fulin 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 Sichuan Fulin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Roborock and Sichuan Fulin.

Diversification Opportunities for Beijing Roborock and Sichuan Fulin

-0.59

Correlation Coefficient

Beijing Roborock  Sichuan Fulin

Excellent diversification

The 3 months correlation between Beijing and Sichuan is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Roborock Technology and Sichuan Fulin Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Fulin Transp 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 Sichuan Fulin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Fulin Transp has no effect on the direction of Beijing Roborock i.e., Beijing Roborock and Sichuan Fulin go up and down completely randomly.

Pair Corralation between Beijing Roborock and Sichuan Fulin

Assuming the 90 days trading horizon Beijing Roborock Technology is expected to under-perform the Sichuan Fulin. In addition to that, Beijing Roborock is 1.13 times more volatile than Sichuan Fulin Transportation. It trades about -0.01 of its total potential returns per unit of risk. Sichuan Fulin Transportation is currently generating about 0.13 per unit of volatility. If you would invest  579.00  in Sichuan Fulin Transportation on October 11, 2024 and sell it today you would earn a total of  128.00  from holding Sichuan Fulin Transportation or generate 22.11% return on investment over 90 days.

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

Beijing Roborock Technology  vs.  Sichuan Fulin Transportation

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 somewhat strong basic indicators, Beijing Roborock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sichuan Fulin Transp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Fulin Transportation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Fulin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijing Roborock and Sichuan Fulin

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

The idea behind Beijing Roborock Technology and Sichuan Fulin Transportation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.