Correlation Between Beijing Roborock and GUOMAI Culture

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

Diversification Opportunities for Beijing Roborock and GUOMAI Culture

0.66

Correlation Coefficient

Beijing Roborock  GUOMAI Culture

Poor diversification

The 3 months correlation between Beijing and GUOMAI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Roborock Technology and GUOMAI Culture Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOMAI Culture Media 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 GUOMAI Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOMAI Culture Media has no effect on the direction of Beijing Roborock i.e., Beijing Roborock and GUOMAI Culture go up and down completely randomly.

Pair Corralation between Beijing Roborock and GUOMAI Culture

Assuming the 90 days trading horizon Beijing Roborock Technology is expected to generate 0.75 times more return on investment than GUOMAI Culture. However, Beijing Roborock Technology is 1.33 times less risky than GUOMAI Culture. It trades about 0.13 of its potential returns per unit of risk. GUOMAI Culture Media is currently generating about 0.05 per unit of risk. If you would invest  21,000  in Beijing Roborock Technology on December 26, 2024 and sell it today you would earn a total of  4,122  from holding Beijing Roborock Technology or generate 19.63% return on investment over 90 days.

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

Beijing Roborock Technology  vs.  GUOMAI Culture Media

Beijing Roborock Tec

Risk-Adjusted Performance

OK

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

GUOMAI Culture Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GUOMAI Culture Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GUOMAI Culture may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Beijing Roborock and GUOMAI Culture

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

The idea behind Beijing Roborock Technology and GUOMAI Culture Media 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.