Correlation Between Beijing Roborock and Tianneng Battery

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

Diversification Opportunities for Beijing Roborock and Tianneng Battery

0.75

Correlation Coefficient

Beijing Roborock  Tianneng Battery

Poor diversification

The 3 months correlation between Beijing and Tianneng is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Roborock Technology and Tianneng Battery Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianneng Battery 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 Tianneng Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianneng Battery has no effect on the direction of Beijing Roborock i.e., Beijing Roborock and Tianneng Battery go up and down completely randomly.

Pair Corralation between Beijing Roborock and Tianneng Battery

Assuming the 90 days trading horizon Beijing Roborock Technology is expected to generate 2.02 times more return on investment than Tianneng Battery. However, Beijing Roborock is 2.02 times more volatile than Tianneng Battery Group. It trades about 0.13 of its potential returns per unit of risk. Tianneng Battery Group is currently generating about -0.11 per unit of risk. If you would invest  20,352  in Beijing Roborock Technology on September 23, 2024 and sell it today you would earn a total of  1,250  from holding Beijing Roborock Technology or generate 6.14% 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.  Tianneng Battery Group

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.

Tianneng Battery

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tianneng Battery Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tianneng Battery 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 Tianneng Battery

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

The idea behind Beijing Roborock Technology and Tianneng Battery Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.