Correlation Between Data#3 and Beijing MediaLimited
Can any of the company-specific risk be diversified away by investing in both Data#3 and Beijing MediaLimited 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 Data#3 and Beijing MediaLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Data3 Limited and Beijing Media, you can compare the effects of market volatilities on Data#3 and Beijing MediaLimited 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 Data#3 with a short position of Beijing MediaLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data#3 and Beijing MediaLimited.
Diversification Opportunities for Data#3 and Beijing MediaLimited
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Data#3 and Beijing is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Data3 Limited and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing MediaLimited and Data#3 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 Data3 Limited are associated (or correlated) with Beijing MediaLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing MediaLimited has no effect on the direction of Data#3 i.e., Data#3 and Beijing MediaLimited go up and down completely randomly.
Pair Corralation between Data#3 and Beijing MediaLimited
Assuming the 90 days horizon Data#3 is expected to generate 1.25 times less return on investment than Beijing MediaLimited. But when comparing it to its historical volatility, Data3 Limited is 2.48 times less risky than Beijing MediaLimited. It trades about 0.02 of its potential returns per unit of risk. Beijing Media is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5.20 in Beijing Media on September 1, 2024 and sell it today you would lose (2.00) from holding Beijing Media or give up 38.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Data3 Limited vs. Beijing Media
Performance |
| Timeline |
| Data3 Limited |
| Beijing MediaLimited |
Data#3 and Beijing MediaLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Data#3 and Beijing MediaLimited
The main advantage of trading using opposite Data#3 and Beijing MediaLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data#3 position performs unexpectedly, Beijing MediaLimited 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 Beijing MediaLimited will offset losses from the drop in Beijing MediaLimited's long position.| Data#3 vs. FUJITSU LTD ADR | Data#3 vs. Superior Plus Corp | Data#3 vs. NMI Holdings | Data#3 vs. Origin Agritech |
| Beijing MediaLimited vs. Publicis Groupe SA | Beijing MediaLimited vs. WPP PLC ADR | Beijing MediaLimited vs. Superior Plus Corp | Beijing MediaLimited vs. NMI Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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