Correlation Between Vulcan Materials and BEIJJINGNENG CLERGHYC1

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

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

Diversification Opportunities for Vulcan Materials and BEIJJINGNENG CLERGHYC1

0.11

Correlation Coefficient

Vulcan Materials  BEIJJINGNENG CLERGHYC1

Average diversification

The 3 months correlation between Vulcan and BEIJJINGNENG is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and BEIJJINGNENG CLERGHYC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEIJJINGNENG CLERGHYC1 and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials i.e., Vulcan Materials and BEIJJINGNENG CLERGHYC1 go up and down completely randomly.

Pair Corralation between Vulcan Materials and BEIJJINGNENG CLERGHYC1

Assuming the 90 days horizon Vulcan Materials is expected to generate 0.48 times more return on investment than BEIJJINGNENG CLERGHYC1. However, Vulcan Materials is 2.09 times less risky than BEIJJINGNENG CLERGHYC1. It trades about 0.23 of its potential returns per unit of risk. BEIJJINGNENG CLERGHYC1 is currently generating about 0.04 per unit of risk. If you would invest  20,761  in Vulcan Materials on September 5, 2024 and sell it today you would earn a total of  6,439  from holding Vulcan Materials or generate 31.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Vulcan Materials  vs.  BEIJJINGNENG CLERGHYC1

Vulcan Materials

Risk-Adjusted Performance

18 of 100

Solid

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

BEIJJINGNENG CLERGHYC1

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BEIJJINGNENG CLERGHYC1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BEIJJINGNENG CLERGHYC1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vulcan Materials and BEIJJINGNENG CLERGHYC1

The main advantage of trading using opposite Vulcan Materials and BEIJJINGNENG CLERGHYC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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 Vulcan Materials 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.