Correlation Between Beijing YanDong and Anhui Tongguan

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

By analyzing existing cross correlation between Beijing YanDong MicroElectronic and Anhui Tongguan Copper, you can compare the effects of market volatilities on Beijing YanDong and Anhui Tongguan 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 YanDong with a short position of Anhui Tongguan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing YanDong and Anhui Tongguan.

Diversification Opportunities for Beijing YanDong and Anhui Tongguan

0.53

Correlation Coefficient

Beijing YanDong  Anhui Tongguan

Very weak diversification

The 3 months correlation between Beijing and Anhui is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Beijing YanDong MicroElectroni and Anhui Tongguan Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Tongguan Copper and Beijing YanDong 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 YanDong MicroElectronic are associated (or correlated) with Anhui Tongguan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Tongguan Copper has no effect on the direction of Beijing YanDong i.e., Beijing YanDong and Anhui Tongguan go up and down completely randomly.

Pair Corralation between Beijing YanDong and Anhui Tongguan

Assuming the 90 days trading horizon Beijing YanDong MicroElectronic is expected to under-perform the Anhui Tongguan. In addition to that, Beijing YanDong is 1.42 times more volatile than Anhui Tongguan Copper. It trades about -0.01 of its total potential returns per unit of risk. Anhui Tongguan Copper is currently generating about 0.07 per unit of volatility. If you would invest  1,053  in Anhui Tongguan Copper on December 24, 2024 and sell it today you would earn a total of  92.00  from holding Anhui Tongguan Copper or generate 8.74% return on investment over 90 days.

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

Beijing YanDong MicroElectroni  vs.  Anhui Tongguan Copper

Beijing YanDong Micr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijing YanDong MicroElectronic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Beijing YanDong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Anhui Tongguan Copper

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Tongguan Copper are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Tongguan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Beijing YanDong and Anhui Tongguan

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

The idea behind Beijing YanDong MicroElectronic and Anhui Tongguan Copper 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.