Correlation Between Beijing Seeyon and Shenzhen Topway

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

By analyzing existing cross correlation between Beijing Seeyon Internet and Shenzhen Topway Video, you can compare the effects of market volatilities on Beijing Seeyon and Shenzhen Topway 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 Seeyon with a short position of Shenzhen Topway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Seeyon and Shenzhen Topway.

Diversification Opportunities for Beijing Seeyon and Shenzhen Topway

0.85

Correlation Coefficient

Beijing Seeyon  Shenzhen Topway

Very poor diversification

The 3 months correlation between Beijing and Shenzhen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Seeyon Internet and Shenzhen Topway Video in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Topway Video and Beijing Seeyon 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 Seeyon Internet are associated (or correlated) with Shenzhen Topway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Topway Video has no effect on the direction of Beijing Seeyon i.e., Beijing Seeyon and Shenzhen Topway go up and down completely randomly.

Pair Corralation between Beijing Seeyon and Shenzhen Topway

Assuming the 90 days trading horizon Beijing Seeyon Internet is expected to under-perform the Shenzhen Topway. In addition to that, Beijing Seeyon is 1.14 times more volatile than Shenzhen Topway Video. It trades about -0.4 of its total potential returns per unit of risk. Shenzhen Topway Video is currently generating about -0.46 per unit of volatility. If you would invest  1,043  in Shenzhen Topway Video on October 11, 2024 and sell it today you would lose (290.00) from holding Shenzhen Topway Video or give up 27.8% of portfolio value over 90 days.

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

Beijing Seeyon Internet  vs.  Shenzhen Topway Video

Beijing Seeyon Internet

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shenzhen Topway Video

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Topway Video has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shenzhen Topway 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 Seeyon and Shenzhen Topway

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

The idea behind Beijing Seeyon Internet and Shenzhen Topway Video 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 Stocks Directory module to find actively traded stocks across global markets.