Correlation Between Anhui Conch and Beijing Enterprises

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

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

Diversification Opportunities for Anhui Conch and Beijing Enterprises

-0.21

Correlation Coefficient

Anhui Conch  Beijing Enterprises

Very good diversification

The 3 months correlation between Anhui and Beijing is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Conch Cement and Beijing Enterprises Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Enterprises Water and Anhui Conch 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 Anhui Conch Cement are associated (or correlated) with Beijing Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Enterprises Water has no effect on the direction of Anhui Conch i.e., Anhui Conch and Beijing Enterprises go up and down completely randomly.

Pair Corralation between Anhui Conch and Beijing Enterprises

Assuming the 90 days horizon Anhui Conch Cement is expected to generate 1.01 times more return on investment than Beijing Enterprises. However, Anhui Conch is 1.01 times more volatile than Beijing Enterprises Water. It trades about 0.1 of its potential returns per unit of risk. Beijing Enterprises Water is currently generating about -0.09 per unit of risk. If you would invest  1,258  in Anhui Conch Cement on December 29, 2024 and sell it today you would earn a total of  169.00  from holding Anhui Conch Cement or generate 13.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Anhui Conch Cement  vs.  Beijing Enterprises Water

Anhui Conch Cement

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Conch Cement are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, Anhui Conch showed solid returns over the last few months and may actually be approaching a breakup point.

Beijing Enterprises Water

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijing Enterprises Water has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Anhui Conch and Beijing Enterprises

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

The idea behind Anhui Conch Cement and Beijing Enterprises Water 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.