Correlation Between BAIYU Holdings and Rio Tinto

Can any of the company-specific risk be diversified away by investing in both BAIYU Holdings and Rio Tinto 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 BAIYU Holdings and Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BAIYU Holdings and Rio Tinto ADR, you can compare the effects of market volatilities on BAIYU Holdings and Rio Tinto 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 BAIYU Holdings with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAIYU Holdings and Rio Tinto.

Diversification Opportunities for BAIYU Holdings and Rio Tinto

0.0

Correlation Coefficient

BAIYU Holdings  Rio Tinto

Pay attention - limited upside

The 3 months correlation between BAIYU and Rio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BAIYU Holdings and Rio Tinto ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto ADR and BAIYU Holdings 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 BAIYU Holdings are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto ADR has no effect on the direction of BAIYU Holdings i.e., BAIYU Holdings and Rio Tinto go up and down completely randomly.

Pair Corralation between BAIYU Holdings and Rio Tinto

If you would invest  5,717  in Rio Tinto ADR on December 26, 2024 and sell it today you would earn a total of  570.00  from holding Rio Tinto ADR or generate 9.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BAIYU Holdings  vs.  Rio Tinto ADR

BAIYU Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BAIYU Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Rio Tinto ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rio Tinto ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Rio Tinto may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BAIYU Holdings and Rio Tinto

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

The idea behind BAIYU Holdings and Rio Tinto ADR 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..