Correlation Between Beijing Tong and Sugi Holdings

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

By analyzing existing cross correlation between Beijing Tong Ren and Sugi Holdings CoLtd, you can compare the effects of market volatilities on Beijing Tong and Sugi Holdings 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 Tong with a short position of Sugi Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Tong and Sugi Holdings.

Diversification Opportunities for Beijing Tong and Sugi Holdings

-0.36

Correlation Coefficient

Beijing Tong  Sugi Holdings

Very good diversification

The 3 months correlation between Beijing and Sugi is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Tong Ren and Sugi Holdings CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sugi Holdings CoLtd and Beijing Tong 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 Tong Ren are associated (or correlated) with Sugi Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sugi Holdings CoLtd has no effect on the direction of Beijing Tong i.e., Beijing Tong and Sugi Holdings go up and down completely randomly.

Pair Corralation between Beijing Tong and Sugi Holdings

Assuming the 90 days horizon Beijing Tong Ren is expected to under-perform the Sugi Holdings. In addition to that, Beijing Tong is 1.16 times more volatile than Sugi Holdings CoLtd. It trades about -0.02 of its total potential returns per unit of risk. Sugi Holdings CoLtd is currently generating about 0.23 per unit of volatility. If you would invest  1,479  in Sugi Holdings CoLtd on December 28, 2024 and sell it today you would earn a total of  291.00  from holding Sugi Holdings CoLtd or generate 19.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Beijing Tong Ren  vs.  Sugi Holdings CoLtd

Beijing Tong Ren

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijing Tong Ren has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Beijing Tong is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sugi Holdings CoLtd

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sugi Holdings CoLtd are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sugi Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijing Tong and Sugi Holdings

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

The idea behind Beijing Tong Ren and Sugi Holdings CoLtd 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 Global Correlations module to find global opportunities by holding instruments from different markets.