Correlation Between Beijing Media and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both Beijing Media and Townsquare Media 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 Media and Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Media and Townsquare Media, you can compare the effects of market volatilities on Beijing Media and Townsquare Media 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 Media with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Media and Townsquare Media.
Diversification Opportunities for Beijing Media and Townsquare Media
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beijing and Townsquare is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Media and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and Beijing Media 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 Media are associated (or correlated) with Townsquare Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Townsquare Media has no effect on the direction of Beijing Media i.e., Beijing Media and Townsquare Media go up and down completely randomly.
Pair Corralation between Beijing Media and Townsquare Media
Assuming the 90 days horizon Beijing Media is expected to generate 1.73 times more return on investment than Townsquare Media. However, Beijing Media is 1.73 times more volatile than Townsquare Media. It trades about 0.05 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.07 per unit of risk. If you would invest 3.60 in Beijing Media on December 30, 2024 and sell it today you would earn a total of 0.25 from holding Beijing Media or generate 6.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Beijing Media vs. Townsquare Media
Performance |
Timeline |
Beijing Media |
Townsquare Media |
Beijing Media and Townsquare Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Beijing Media and Townsquare Media
The main advantage of trading using opposite Beijing Media and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Media position performs unexpectedly, Townsquare Media 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 Townsquare Media will offset losses from the drop in Townsquare Media's long position.Beijing Media vs. UNITED INTERNET N | Beijing Media vs. AUSNUTRIA DAIRY | Beijing Media vs. TELECOM ITALRISP ADR10 | Beijing Media vs. Austevoll Seafood ASA |
Townsquare Media vs. ELECTRONIC ARTS | Townsquare Media vs. Nucletron Electronic Aktiengesellschaft | Townsquare Media vs. ARROW ELECTRONICS | Townsquare Media vs. BROADPEAK SA EO |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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