Correlation Between Beijing Roborock and Industrial Bank

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

Diversification Opportunities for Beijing Roborock and Industrial Bank

0.65

Correlation Coefficient

Beijing Roborock  Industrial Bank

Poor diversification

The 3 months correlation between Beijing and Industrial is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Roborock Technology and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Beijing Roborock i.e., Beijing Roborock and Industrial Bank go up and down completely randomly.

Pair Corralation between Beijing Roborock and Industrial Bank

Assuming the 90 days trading horizon Beijing Roborock Technology is expected to under-perform the Industrial Bank. In addition to that, Beijing Roborock is 2.12 times more volatile than Industrial Bank Co. It trades about -0.13 of its total potential returns per unit of risk. Industrial Bank Co is currently generating about -0.04 per unit of volatility. If you would invest  2,001  in Industrial Bank Co on October 7, 2024 and sell it today you would lose (109.00) from holding Industrial Bank Co or give up 5.45% of portfolio value over 90 days.

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

Beijing Roborock Technology  vs.  Industrial Bank Co

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Industrial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Bank Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Industrial Bank 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 Industrial Bank

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

The idea behind Beijing Roborock Technology and Industrial Bank Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.