Correlation Between United States and BAIYU Holdings

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

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

Diversification Opportunities for United States and BAIYU Holdings

0.09

Correlation Coefficient

United States  BAIYU Holdings

Significant diversification

The 3 months correlation between United and BAIYU is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings and United States 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 United States Steel are associated (or correlated) with BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of United States i.e., United States and BAIYU Holdings go up and down completely randomly.

Pair Corralation between United States and BAIYU Holdings

Taking into account the 90-day investment horizon United States Steel is expected to generate 0.36 times more return on investment than BAIYU Holdings. However, United States Steel is 2.78 times less risky than BAIYU Holdings. It trades about 0.03 of its potential returns per unit of risk. BAIYU Holdings is currently generating about -0.08 per unit of risk. If you would invest  2,786  in United States Steel on October 11, 2024 and sell it today you would earn a total of  492.00  from holding United States Steel or generate 17.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.74%
Values	Daily Returns

United States Steel  vs.  BAIYU Holdings

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BAIYU Holdings

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with United States and BAIYU Holdings

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

The idea behind United States Steel and BAIYU Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.