Correlation Between Beijing Mainstreets and Chongqing Road
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By analyzing existing cross correlation between Beijing Mainstreets Investment and Chongqing Road Bridge, you can compare the effects of market volatilities on Beijing Mainstreets and Chongqing Road 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 Mainstreets with a short position of Chongqing Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Mainstreets and Chongqing Road.
Diversification Opportunities for Beijing Mainstreets and Chongqing Road
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Beijing and Chongqing is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Mainstreets Investment and Chongqing Road Bridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Road Bridge and Beijing Mainstreets 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 Mainstreets Investment are associated (or correlated) with Chongqing Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Road Bridge has no effect on the direction of Beijing Mainstreets i.e., Beijing Mainstreets and Chongqing Road go up and down completely randomly.
Pair Corralation between Beijing Mainstreets and Chongqing Road
Assuming the 90 days trading horizon Beijing Mainstreets Investment is expected to generate 1.43 times more return on investment than Chongqing Road. However, Beijing Mainstreets is 1.43 times more volatile than Chongqing Road Bridge. It trades about 0.13 of its potential returns per unit of risk. Chongqing Road Bridge is currently generating about 0.17 per unit of risk. If you would invest 232.00 in Beijing Mainstreets Investment on November 7, 2024 and sell it today you would earn a total of 12.00 from holding Beijing Mainstreets Investment or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Mainstreets Investment vs. Chongqing Road Bridge
Performance |
| Timeline |
| Beijing Mainstreets |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Chongqing Road Bridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Beijing Mainstreets and Chongqing Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Mainstreets and Chongqing Road
The main advantage of trading using opposite Beijing Mainstreets and Chongqing Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Mainstreets position performs unexpectedly, Chongqing Road 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 Chongqing Road will offset losses from the drop in Chongqing Road's long position.The idea behind Beijing Mainstreets Investment and Chongqing Road Bridge 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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