Correlation Between TOHOKU EL and BEIJJINGNENG CLERGHYC1

Can any of the company-specific risk be diversified away by investing in both TOHOKU EL and BEIJJINGNENG CLERGHYC1 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 TOHOKU EL and BEIJJINGNENG CLERGHYC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TOHOKU EL PWR and BEIJJINGNENG CLERGHYC1, you can compare the effects of market volatilities on TOHOKU EL and BEIJJINGNENG CLERGHYC1 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 TOHOKU EL with a short position of BEIJJINGNENG CLERGHYC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOHOKU EL and BEIJJINGNENG CLERGHYC1.

Diversification Opportunities for TOHOKU EL and BEIJJINGNENG CLERGHYC1

0.16

Correlation Coefficient

TOHOKU EL  BEIJJINGNENG CLERGHYC1

Average diversification

The 3 months correlation between TOHOKU and BEIJJINGNENG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding TOHOKU EL PWR and BEIJJINGNENG CLERGHYC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEIJJINGNENG CLERGHYC1 and TOHOKU EL 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 TOHOKU EL PWR are associated (or correlated) with BEIJJINGNENG CLERGHYC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEIJJINGNENG CLERGHYC1 has no effect on the direction of TOHOKU EL i.e., TOHOKU EL and BEIJJINGNENG CLERGHYC1 go up and down completely randomly.

Pair Corralation between TOHOKU EL and BEIJJINGNENG CLERGHYC1

Assuming the 90 days horizon TOHOKU EL PWR is expected to under-perform the BEIJJINGNENG CLERGHYC1. But the stock apears to be less risky and, when comparing its historical volatility, TOHOKU EL PWR is 1.32 times less risky than BEIJJINGNENG CLERGHYC1. The stock trades about -0.07 of its potential returns per unit of risk. The BEIJJINGNENG CLERGHYC1 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  19.00  in BEIJJINGNENG CLERGHYC1 on September 12, 2024 and sell it today you would earn a total of  2.00  from holding BEIJJINGNENG CLERGHYC1 or generate 10.53% return on investment over 90 days.

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

TOHOKU EL PWR  vs.  BEIJJINGNENG CLERGHYC1

TOHOKU EL PWR

Risk-Adjusted Performance

0 of 100

Very Weak

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

BEIJJINGNENG CLERGHYC1

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BEIJJINGNENG CLERGHYC1 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BEIJJINGNENG CLERGHYC1 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOHOKU EL and BEIJJINGNENG CLERGHYC1

The main advantage of trading using opposite TOHOKU EL and BEIJJINGNENG CLERGHYC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOHOKU EL position performs unexpectedly, BEIJJINGNENG CLERGHYC1 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 BEIJJINGNENG CLERGHYC1 will offset losses from the drop in BEIJJINGNENG CLERGHYC1's long position.

The idea behind TOHOKU EL PWR and BEIJJINGNENG CLERGHYC1 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.