Correlation Between Beingmate Baby and China Sports

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Can any of the company-specific risk be diversified away by investing in both Beingmate Baby and China Sports 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 Beingmate Baby and China Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beingmate Baby Child and China Sports Industry, you can compare the effects of market volatilities on Beingmate Baby and China Sports 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 Beingmate Baby with a short position of China Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beingmate Baby and China Sports.

Diversification Opportunities for Beingmate Baby and China Sports

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Beingmate and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Beingmate Baby Child and China Sports Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Sports Industry and Beingmate Baby 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 Beingmate Baby Child are associated (or correlated) with China Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Sports Industry has no effect on the direction of Beingmate Baby i.e., Beingmate Baby and China Sports go up and down completely randomly.

Pair Corralation between Beingmate Baby and China Sports

Assuming the 90 days trading horizon Beingmate Baby Child is expected to generate 1.41 times more return on investment than China Sports. However, Beingmate Baby is 1.41 times more volatile than China Sports Industry. It trades about 0.02 of its potential returns per unit of risk. China Sports Industry is currently generating about -0.02 per unit of risk. If you would invest  420.00  in Beingmate Baby Child on November 8, 2024 and sell it today you would earn a total of  1.00  from holding Beingmate Baby Child or generate 0.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Beingmate Baby Child  vs.  China Sports Industry

 Performance 
       Timeline  
Beingmate Baby Child 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Beingmate Baby Child has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
China Sports Industry 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days China Sports Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Sports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Beingmate Baby and China Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beingmate Baby and China Sports

The main advantage of trading using opposite Beingmate Baby and China Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beingmate Baby position performs unexpectedly, China Sports 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 China Sports will offset losses from the drop in China Sports' long position.
The idea behind Beingmate Baby Child and China Sports Industry 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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